Oman is still waiting for a promised $10bn in aid promised by the GCC in March to help fund the government’s domestic investment programme in the wake of protests about the country’s unemployment rate.
“We are still working on the details and mechanisms and expect to receive it by early next year,” says Darwish bin Ismail al-Balushi, minister responsible for financial affairs.
Protests against the government started in Oman in February, inspired by the removal of rulers in Tunisia and Egypt. In response, the GCC promised $20bn in aid, split between Oman and Bahrain, which was also been rocked by social unrest.
The Omani government is investing RO30bn ($77.9bn) over the next five years to diversify its economy away from oil. “The challenge is always the diversification of the economy. The government is putting a lot of efforts to diversify away from oil,” says Al- Balushi. Oil currently contributes 45 per cent to Oman’s gross domestic product (GDP).
“We will be investing in different sectors of the economy like tourism, infrastructure and manufacturing. The aim of the expenditure is to provide a conducive environment for the private sector to take the role in investing in the country and therefore create projects, which will in turn create jobs and stand beside oil in terms of national income,” says Balushi.
The sultanate has already attracted RO21bn in investment for RO40bn of planned projects. The government will be giving more importance to developing free trade zones and industrial zones, which it hopes will attract more local and foreign direct investment (FDI).
Higher oil prices have helped to spur growth. The average price of Omani oil is expected to reach $100 a barrel and the economy is expected to grow 5.6 per cent this year, according to al-Balushi. The prospect for 2012 is optimistic, says al-Balushi, even though he expects the oil price to stabilise and drop to about $80 a barrel.
Oman also expects to maintain its A2 credit rating over the next year. The country experienced protests earlier this year, but they were fairly muted in comparison to other countries in the region. As a result, the government has pledged OR1.2bn to improve services.
“We don’t think they [protests] had any negative impact. The additional expenditure that was directed towards meeting the demands of the people is going to stimulate the economy, especially local consumption,” says Al-Balushi.
|Oman annual GDP growth|
|GDP=Gross domestic product. Source: World Bank|