Oman's econ­omy keeps gain­ing strength

The Pak Banker - - Front Page - Dr Jasim Ali

ON 18th Novem­ber, Oman cel­e­brated its 42nd in­de­pen­dence amidst promis­ing eco­nomic po­ten­tials in­clud­ing the pos­si­bil­ity of hik­ing ex­pen­di­tures for fis­cal year 2013 by a no­table 10 per cent. In ret­ro­spect, the government ap­proved the bud­get for 2012 with spend­ing of US$26 bil­lion leav­ing be­hind pro­jected short­fall of $3.1 bil­lion.

The In­ter­na­tional Mon­e­tary Fund con­sid­ers a price of $81 per bar­rel as a break-even with rev- enues equal­ing ex­pen­di­tures for 2012 bud­get. Cer­tainly, this rate is higher than that used in pre­par­ing the bud­get, namely $75 per bar­rel.

Yet, ac­cord­ing to Reuters, Oman has re­port­edly sold its oil at the rate of $113 per bar­rel in the pe­riod of Jan­uary-July. As such, fi­nal statis­tics for 2012 once pub­lished are bound to be dif­fer­ent and stronger with stronger in­come and thereby spend­ing and the pos­si­bil­ity of turn­ing the deficit into even­tual sur­plus.

In re­al­ity, the IMF pre­dicts fis­cal sur­plus in 2012 to con­sti­tute around 8 per cent of the gross domestic prod­uct (GDP), cer­tainly an achieve­ment in to­day's world where bud­getary deficit rather than sur­plus tends to be the rule. Other wel­com­ing de­vel­op­ments in­clude real, ad­justed for in­fla­tion, GDP growth rate of 5 per cent in 2012. The fig­ure is slightly down from that of 5.5 per cent in 2011 pri­mar­ily re­flect­ing slow­down of growth of out­put in the hy­dro­car­bon sec­tor.

How­ever, slow­down of growth of oil pro­duc­tion is not sur­pris­ing at all fol­low­ing years of steady in­crease in out­put. Ac­cord­ing to the au­thor­i­ta­tive BP Sta­tis­ti­cal Re­view of World En­ergy, the sul­tanate's oil pro­duc­tion amounted to 715,000 bar­rels per day (bpd) in 2007 only to in­crease to 891,000 bpd in 2011.

Such statis­tics help pro­vid­ing the nec­es­sary logic be­hind Oman's abil­ity of sus­tain­ing in­vest­ment­grade marks by key rat­ing agen­cies. To be sure, Stan­dard & Poor's and Moody's ex­tend rat­ings of (A) and (A1), re­spec­tively. Still, both agen­cies re­gard out­look for the econ­omy as a sta­ble one, a promis­ing mat­ter.

Un­doubt­edly, pub­lic sec­tor spend­ing is ex­cep­tion­ally sig­nif­i­cant by virtue of com­pris­ing about one third of the coun­try's GDP. Still, sig­nif­i­cance of gov­ern­men­tal spend­ing is higher nowa­days partly re­flect­ing the de­sires of meet­ing so­cio-eco­nomic de­mands made of pro­tes­tors tak­ing place in early 2011.

Amongst oth­ers, pro­tes­tors pressed for res­o­lu­tion to out­stand­ing prob­lems such as ram­pant un­em­ploy­ment. By one ac­count, the job­less rate stood around 15 per cent when protests erupted in the in­dus­trial town of So­har. How­ever, the fig­ure rises to around 24 per cent if count­ing those not ac­tively seek­ing em­ploy­ment.

Avail­able statis­tics sug­gest that the Omani pop­u­la­tion is notably youth, with those fall­ing in the age bracket up to 14 years com­pris­ing a hefty 31 per cent of the to­tal. Still, other fig­ures sug­gest that around half of Omani na­tion­als are be­low 20 years of age. Sim­i­lar to Saudi Arabia but un­like the other four GCC coun­tries, Omani na­tion­als make the ma­jor­ity of more than 3 mil­lion peo­ple liv­ing in the sul­tanate.

Hap­pily, the coun­try seems to be read­ier than ever for em­brac­ing busi­ness, as proven by im­prov­ing per­for­mance in a key an­nual sur­vey pub­lished by the World Bank and the In­ter­na­tional Fi­nance Cor­po­ra­tion. Of all GCC coun­tries, only the UAE and Oman en­hanced their rank­ings in Do­ing Busi­ness 2013. Oman suc­ceeded in im­prov- ing its rank­ing from po­si­tion num­bers of 53 to 49 and more re­cently 47 in the last re­ports, which rank coun­tries on the ba­sis of their friend­li­ness to small and medi­um­sized en­ter­prises.

Numer­ous indi­ca­tions in­clud­ing steady gov­ern­men­tal spend­ing to­gether with ab­sence of in­fla­tion­ary pres­sures sug­gest that the Omani econ­omy would post ex­cep­tional re­sults in 2013. And any eco­nomic achieve­ment should re­gard hu­man devel­op­ment a pri­or­ity.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.