Oman’s sovereign wealth fund is shifting its tourism and property investments as part of a long-running effort to diversify the Persian Gulf country’s economy.
The $17 billion Oman Investment Authority will transfer a tourism development project as well as resorts to the Omran Tourism Development Company, or Omran Group, according to Bloomberg.
The Omran Group was established by the Omani government in 2005 to encourage economic diversification and attract foreign investment, according to the report. The transfer aims to “boost the growth of the Omran Group and strengthen its role in supporting economic diversification,” a statement said.
Oman has a population of around 5 million and its economy is highly dependent on the production of natural resources. Oil activities accounted for 36% of gross domestic product in 2018, up 7% from the previous year, according to the Brookings Institution.
The lack of economic diversification means that Oman’s financial health is highly dependent on the price of natural resources. Lower oil prices and the coronavirus pandemic have pushed the country’s budget deficit to the highest in the region.
S&P Global Ratings gave Oman’s credit an A rating as recently as 2015, but it has since been downgraded to junk status due to mounting external debt.
Last year’s economic situation also affected Middle Eastern sovereign wealth fund investments in foreign real estate. This has limited their ability to take advantage of the opportunities created by the pandemic, namely the overall decline in real estate values. [Bloomberg] — Dennis Lynch