MUSCAT: Oman’s Vision 2020 and successive Five-Year Development Plans are pursuing the strategy of economic diversification, improving the business climate to attract Foreign Direct Investment (FDI) and a greater role for the private sector, according to the Central Bank of Oman’s (CBO’s) annual report. The central bank further said that during the previous 10-year period, the share of the non-hydrocarbon sector increased from 16 per cent to 41 per cent of merchandise exports, while the share of non-oil revenue in public revenue grew from 14 per cent to 22 per cent.
With a view to finance the fiscal deficit, the authorities have planned to utilise fiscal buffers, raise loans from the domestic market without crowding out credit to the private sector and access external markets by the sovereign and government related entities. The successful raising of $1billion in 2015 and of $2.5 billion in June 2016 underscores strong investor appetites, the report said.
Over the years, the government of Oman has implemented sound macro-economic policies, resulting in strong growth, moderate inflation and a stable financial system. On the external sector front, authorities are planning to implement measures in the medium-term to bolster earnings from tourism, strengthen the manufacturing sector, and ratify a new investment law to attract foreign investment to Oman.
In the short-term, the Omani economy is well placed to face the macro-economic challenges emanating from low oil prices. The Sultanate is projected to realise positive real GDP growth in 2015 due to enhanced oil and gas production and a weakened GDP deflator. The outlook for 2016 will be shaped by various factors, including the movement in oil prices, materialisation of rate hikes by the U.S. Federal Reserve, volatility in global financial markets and the exit of Britain from the European Union.
The British economy may register lower economic growth due to the dislocation of trade and business. Britain being one of the topmost sources of FDI into Oman, the authorities have to closely monitor the development as it unfolds. Similarly, the implications of a Chinese slowdown in Oman’s exports have to be observed closely and remedial measures have to be initiated.
