As the cash tills across the country ring in a familiar profusion of sounds, the retail sector will be the only winner amidst the shopping frenzy as heavy spenders add up their huge spending when they go back to work after the Eid holiday.
In shopping malls and high street shops, it appears they are giving away merchandise for free, based upon the number of people standing in queues. Also, banks are bracing for their ATM machines to run empty and have already put in place mobile ATMs across the country to cope with the colossal withdrawals during the 11 days of the official holiday. During last year's Eid, the Central Bank of Oman's statistics showed that consumers spent more than OMR250 million rials in the short span of the holiday — when it was only a five-day holiday. This year the holiday is double the number of days and bankers think consumers will withdraw much more money. For this year, not only has the government granted a longer time off, but the increase of salaries to civil servants this year has given most shoppers greater spending power than ever before.
Yet, with July salaries having been paid in the middle of the month, people will go back to work on August 3, while coping with a severe cash crisis and a long wait for the next payment. People are expected to queue up outside the offices of their bank managers, like they do every year, for the overdraft they cannot afford, which will push their credit limits out of bounds.
Yet, this is not a lesson Omani consumers are likely to learn. What they do not connect is that heavy spending fuels inflation. What they gain this year in salary raises will be lost next year when prices go up.
The debt burden is not new to the public, as it has become a way of life to most, as they finance last month's expenses with their current month's pay, until they get caught when banks cannot finance them anymore. These are the same people who are already paying for their mortgages and car loans.
But who is really to blame?
Perhaps banks, for making credit easily available to the reckless? But financial institutions are in the same game as retailers. Banks will get their money, and if not they repossess properties of those who default on their loans. On the other hand, retailers will continue to tempt consumers with 'bargains' and 'special offers', which buyers find hard to resist. Everybody is in a festive mood and they can count their spending at the end of the holiday.
The other tragedy is that half of what people buy are items they never use or really needed in the first place. Obviously, the government's call to urge Omanis to save more money has gone in the opposite direction. This is not new, since this trend has been going on for many years.
The average Omani pensioner of today hardly has any savings and rely solely on their meagre pensions for their survival. Thirty years ago, in the 1980s, these were the same young people who spent all they earned on things they could not really afford. Now, their children are doing exactly the same. Though they will have a larger pension than their parents, the inflation caused by their crazy spending will make sure it will not amount to much.
With two days to go before the first Eid on Tuesday, there will be no tightening up of the purse or wallet. From video games that will be hardly played to gift packs that will never be opened. It is just spending for the sake of spending. In many cases, the justification is, 'They buy me presents, so I should buy them something.' It is not just the gifts and new clothing on the shopping list, but it is food, as well. And you have guessed right. Much of this food will be thrown away in bins because people buy more than they could eat. For some, it is a show of what money can buy or a form of generosity to make themselves feel good about purchases.
Yet, it is all about common sense, and I am not sure the day will come for the average Omani to see sense when it comes to saving some money for old age.
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