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Oman: New guidelines for govt contracts

Oman: New guidelines for govt contracts

Oman: New guidelines for govt contracts

Jan 02, 2025

MUSCAT: In a move to strengthen fiscal discipline and streamline the management of financial commitments, the Ministry of Finance has issued Circular No (5/2024), detailing a comprehensive framework for signing contracts and managing the state’s financial obligations. The directive comes in light of Royal Decree No (59/2024) and reflects the government’s commitment to ensuring transparency, accountability and efficiency in public spending.

The circular outlines a series of measures aimed at curbing financial mismanagement and fostering better control over contractual and financial practices across all government ministries and units. This initiative marks a pivotal step in enhancing Oman’s fiscal governance as it aligns with the broader objectives of sustainable economic development.

One of the cornerstones of the directive is the emphasis on adhering to approved budgets. The ministry has explicitly prohibited the tendering or awarding of any projects or contracts that create new financial obligations without confirming adequate allocations in the operational or capital budgets. This measure aims to prevent overspending and ensure that financial resources are allocated efficiently and responsibly.

To reinforce the integrity of government contracts, the directive mandates compliance with a set of contractual requirements. Ministries and government entities are required to include guarantees and follow banking procedures, particularly concerning guarantees for government projects. These provisions align with Decision No (169/2023) issued by the Tender Board, ensuring that contracts meet stringent regulatory standards.

Moreover, entities are obligated to submit copies of contracts to the Ministry of Finance for approval before they are signed. This additional layer of oversight ensures that all contracts are reviewed for fiscal compliance, reducing the risk of irregularities or mismanagement.

The ministry’s directive also highlights the need for meticulous planning. Government units must prepare and submit annual project plans to the Ministry of Finance, detailing timelines for project implementation. This initiative aims to avoid delays, ensuring that projects are completed on schedule and within budget. In addition, entities are required to submit reports for development projects exceeding RO 500,000, further emphasising the importance of transparency in managing large-scale investments.

In a bid to promote local economic growth, the circular requires that all contracts include provisions for local content. By mandating the integration of local businesses and resources into government projects, the directive supports Oman’s strategy of fostering sustainable economic growth while benefiting local industries.

The role of internal audit units is crucial under this new framework. These units are tasked with ensuring compliance with the directive’s provisions, conducting regular reviews, and submitting observations to the Ministry of Finance on a quarterly basis. Such measures underscore the ministry’s commitment to holding government entities accountable and ensuring that public funds are managed with the utmost integrity.

The issuance of this circular reflects Oman’s vision for a more transparent and accountable financial system. By enhancing oversight, streamlining processes, and ensuring adherence to budgets, the Ministry of Finance is taking concrete steps to optimise the use of public resources. These measures are expected to have a positive ripple effect on the country’s fiscal health, boosting investor confidence and supporting the broader goals of Oman Vision 2040.