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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT APRIL 2007
MUSCAT SECURITIES MARKET
ECONOMIC AND POLITICAL DEVELOPMENTS
Introduction
The Sultanate of Oman has three
governorates–Muscat, Dhofar and
Musandam. The governorate of Muscat is
Oman's political, economic and
administrative center.
Integration into the World Economy
Oman has a liberal economy and over the
years has succeeded in boosting its own
potential as well as its ability to respond to
developments in the region and beyond. As
a member of the WTO, Oman aims to
strengthen its economic relations with other
economic power and blocs, through the
Arab Gulf Cooperation Council (AGCC), the
Arab League or the Indian Ocean Rim
Association for Regional Co-operation
(IORARC), as well as on a bilateral basis. At
the same time active steps are being taken
to implement the policy of privatization and
open up the electricity sector, as well as
communications, ports, industry, tourism and
other areas to increased foreign investment.
Oman and the World (Foreign Policy)
The main principle of Omani foreign policy
include respect for the national sovereignty
of other countries, noninterference in the
internal affairs of other states and the
fostering of neighborly relations, including
cooperation for the sake of common
interests. It is these principles that determine
and guide the country’s approach to
developments in the Gulf, as well as the
broader Arab and international arenas.
Oman was the first Arab country to establish
diplomatic contact with the US in the first half
of the 19th century and the bicentennial of
the treaty relationship with Britain was
celebrated in January 2000. In recent years
the Sultanate’s relations with the US and the
countries of Europe have gone from strength
to strength.
Balanced, Growth-Oriented Budget
for 2006
The excess of planned aggregate
expenditure of US$ 11 billion over budgeted
revenue receipts of US$ 9.317 billion, is
estimated to leave a higher deficit of
US$ 1.688 billion in 2006, as against a deficit
of US$ 1.403 billion on estimated in the
previous budget. The oil revenue was
calculated on the basis of a price of US$ 32
per barrel, with an average production of
746,000 barrels a day. The deficit, according
to preliminary estimates, constitutes 6% of
the GDP. Oman’s defense budget has been
raised 8.5% to US$ 3.234 billion as against
US$ 2.982 billion budgeted for 2005. The
budget reveals that the nation is to boost
spending on education in a budget flagged
as a boost for social and economic
development. The budgeted revenue for the
year 2006 shows an increase of 14% over
last year. Oil (US$ 6.543 billion) and gas
(US$ 1.023 billion) revenues for 2006
constitute 81% of total revenues, and current
and capital revenues (US$ 1.751 billion)
constitute the remaining 19%. More
precisely, oil revenue will contribute 70% to
the total revenues, while gas revenue will
contribute 11%. Total expenditure of
US$ 11 billion for the fiscal year 2006 is
US$ 1.447 billion or 15% more than the
previous year’s budget. Current expenditure
for the government civil ministries and units
is estimated at US$ 3.64 billion, constituting
nearly 33% of the total public expenditure.
This will cover basic and operational
expenditure of government services,
ministries and units.
Preliminary estimates indicate the GDP at
current prices is expected to register an
average growth rate of 8.7% during the Sixth
Plan period. During this period, the economy
registered low inflation rates, with an annual
rate, not exceeding 0.3% despite increase in
prices in 2005 on fall in dollar exchange rate.
Price increase in the international market has
also affected the price trends in Oman. In
addition, the balance of payments position
witnessed an improvement. The current
account balance registered surpluses of an
annual average of US$ 1.442 billion.
Non-oil activities witnessed a recovery during
the plan period. On an average, non-oil
activities, at current prices, grew by 9.2%
annually. Natural gas-based industries
registered a high annual growth of about
36.8% during the plan period. The non-oil
merchandise exports, including the reexports
increased during the Plan period
from US$ 2.405 billion in 2000 to US$ 4.906
billion in 2005, registering an annual average
growth of 15.3%.
Tourism sector witnessed remarkable growth
during the plan period. On an average, its
value addition, at current prices, grew by
6.7% annually. The capacity of the sector
(number of rooms) increased by 8.8%.
The total number of hotel rooms increased
from 5,312 rooms in 2000 to 8,082 in 2005.*
* Information provided by the Muscat Securities Market.
Key Information Contacts
Ministry of National Economy www.moneoman.gov.om
Capital Market Authority www.cma-oman.gov.om
Oman Chamber of Commerce and Industry www.cbo-oman.org
Financial Corporation www.fincorp.org
National Bank of Oman www.nbo.co.om
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