Across the Middle East, from Lebanon to Iraq, there is growing popular anger and frustration at government mismanagement of financial resources and service delivery. Fiscal policy is at the center of popular politics. As some states seek to hold off on cutting subsidies, raising taxes, altering state and military structures of ownership and deflating bloated public sectors, there are few policy options to raise additional sources of cash. The governments can borrow. They can sell off assets. They can increase dependence on foreign aid. Or they can devalue their currencies and pass the cost of failing to reform to citizens by erasing their savings. 

Where the money comes from matters; enticing foreign investment has proved harder than some states may have expected. Saudi Arabia spent three years trying to raise capital with an initial public offering of its national oil company Aramco, only to raise $26 billion from mostly domestic investors, from an early goal of over $150 billion in an international offering of a larger portion of shares. In Oman, the sleepy sultanate has embarked on a fast track to capital raising, seeking a number of privatizations of state-owned assets. It needs the money, and fast. The investors coming to the rescue are of a new kind — states and state-owned entities, many from China.

Oman faces a ballooning debt repayment cycle, and a persistent fiscal deficit. This year its budget deficit stood at $2.4 billion in the third quarter of 2019, a 75% increase year-on-year from 2018. The oil sector accounts for over 70% of fiscal revenue, and with a year of declining oil receipts the pressure is building to find alternate funding to continue government spending. Debt repayment is beginning to eat up a large portion of government funds, at a cost of more than $1.14 billion in just the first three quarters of 2019, according to research by HSBC; debt servicing is now nearly nine times higher than it was three years ago. 

So, the sell-off in Oman has begun. In 2018, Oman raised $480 million in the sale of gas pipelines, and $1.3 billion for a 10% stake in its Khazzan gas field to Petronas, the national oil company of Malaysia. The Omani government's holding company for electricity sector entities, Nama, sold a 49% stake in the Oman Electricity Transmission Company to China's State Grid for $1 billion in December. Nama controls a number of other electricity providers within Oman, many also slated for partial privatizations, including an expected sale of Muscat Electricity Distribution Company in 2020. Oman's oil minister has announced the intention for an initial public offering of 20% to 25% of shares in the state-owned Oman Oil Company.