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 revenues 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 investment-grade 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 improving 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 medium-sized 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.
The writer is a Member of Parliament in Bahrain,