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The economic policy of the Sultanate of Oman continues to be based on four pillars: Sustainable development with a stable macroeconomic framework; diversified, dynamic and globalized economy; advanced human resource development; and efficient and competitive private sector.

Diversification of Oman’s economy is one of the important pillars of economic policy and a long term objective as spelt out in Oman Vision 2020. The objective is creating a diversified economy, based on renewable resources, which is highly efficient and integrated with the world economy. The numerical objective is to increase the share of non-oil sector to 15 percent of GDP. The other targets are reducing the share of oil in GDP to 9 % in 2020 and raising the share of gas to 10 percent.

Privatization process has progressed in the electricity sector, in power and related water sector, in the telecommunications sector, in transport sector and in waste water and hazardous waste sectors.

In order to improve the agriculture sector, The Ministry of Agriculture and Fisheries carried out many research and extension activities to educate the farmers and increase their awareness. In 2012, the Ministry completed 41 research projects and 78 are still on-going. These research activities include genetic resources, toxic residual, soil and water management and biological control. The Ministry also implemented about 111,097 extension activities in 2012.

Oman's agriculture sector faces various environmental challenges, such as the scarcity of irrigation water, the poor and declining quality of the soil due to increasing salinization, overgrazing, and adverse climatic conditions. Given its limited cultivable area and unfavourable climate, Oman is likely to remain heavily dependent on imports to meet its domestic demand for most agricultural products.

Water rights are vested in the State. Royal Decree No. 83/88 declared water a national resource, authorizing the Government to take any necessary action to protect and conserve underground water and its development. At the national level the Ministry of Regional Municipalities, Environment and Water Resources (MRMEW) is responsible for groundwater and surface water management. At the local level, water rights are frequently based on aflaj systems where traditional and community-agreed rules on amounts and timings of water use prevail. Water consumed by households is subject to a price cap. About 85% of the rural population had access to clean water in 2011, up from 80% in 2005.

(…) Challenges for water management in Oman include limited rainfall, a hot and dry climate, increasing demand, and high and growing groundwater salinity. A long-term objective for Oman is water desalination through solar power, taking advantage of its long coastline and the highest rates of solar radiation in the world.

A national water resources conservation plan has been drawn up to further rationalize and improve water consumption practices and explore for new groundwater reserves. The Sultanate now has a complete, up-to-date and properly documented database covering all the country’s available and potential water resources, together with details of their status and conditions. Studies on new ways of rationalizing water consumption are ongoing.

Headed by the Prime Minister, the Council of Ministers is entrusted with overseeing State interests, and laying down and implementing government policy. Cabinet resolutions are passed with the approval of the majority of those present. The Cabinet also submits recommendations to the Sultan on economic, political, social, environmental, and executive and administrative matters of concern to the Government, and proposes draft laws and changes for existing laws.

A free-trade agreement between Oman and the United States, signed in January 2006, entered into force in January 2009. The agreement covers trade in goods and services; it also has provisions on investment, intellectual property rights, e-commerce, labour, environment, and dispute settlement. It provides for tariff elimination in agricultural and non-agricultural goods over a maximum of ten years, although a large share of products is granted duty-free access immediately. Special provisions apply to trade in textile and apparel goods.