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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT MAY 2005<br />
MUSCAT SECURITIES MARKET<br />
ECONOMIC AND POLITICAL DEVELOPMENTS<br />
Politic and Economic Environment:<br />
Oman has been launching a massive drive<br />
to build the basic infrastructure facilities and<br />
improve living standards of its citizens since<br />
1970. The key economic indicators such as<br />
Gross National Product (GNP); Gross<br />
Domestic Product (GDP); per capita income;<br />
money supply (M3); trade balance and<br />
foreign currency reserves indicated<br />
remarkable growth in 2004.<br />
The policy response of Oman to the<br />
changing international and domestic<br />
economic conditions is marked by its clearcut<br />
willingness to adjust and remain flexible.<br />
Oman's fiscal position has been showing<br />
considerable growth since the 1970s.<br />
The nation has witnessed noticeable<br />
economic achievements in 2004 that are<br />
reflected in its modern physical<br />
infrastructure. Considerable progress in<br />
basic health and education systems and the<br />
improvement in standard of living have been<br />
commendable.<br />
Key Information Contacts<br />
Ministry of National Economy www.moneoman.gov.om<br />
Capital Market Authority www.cma-oman.gov.om<br />
Oman Chamber of Commerce and Industry www.cbo-oman.org<br />
Financial Corporation www.fincorp.org<br />
National Bank of Oman www.nbo.co.om<br />
PAGE 108<br />
Economic Performance:<br />
According to provisional estimates, the<br />
domestic economy registered a record<br />
12.5% growth in 2004 as against 6.9%<br />
recorded in 2003. A sharp increase in oil<br />
prices brought windfall profits for Oman in<br />
2004. Oman crude realized an average price<br />
of US$ 33.9 a barrel last year compared with<br />
the budgeted price of US$ 21.0 a barrel, an<br />
increase of US$ 12.9 a barrel. The government<br />
had increased public expenditure by another<br />
US$ 784 million during the year, resulting in<br />
a higher deficit of US$ 2.1 billion as against<br />
the budgeted deficit of US$ 1.3 billion.<br />
Though the oil revenues were estimated at<br />
US$ 4.3 billion, it grew by a whopping<br />
US$ 3.3 billion to US$ 7.6 billion. Thus the<br />
total actual revenues rose by nearly 43% to<br />
US$ 10.9 billion as against the estimated<br />
US$ 7.6 billion. Oil revenues contributed<br />
more than 69.5% of total income in 2004.<br />
From the additional revenues of US$ 3.3<br />
billion, the total exposure is US$ 2.5 billion,<br />
comprising budgeted deficit of US$ 1.3<br />
billion, additional allocations of US$ 784<br />
million and payment of foreign debts of US$<br />
539 million. The remaining surplus amount is<br />
expected to be reserved as additional<br />
resources for the government.<br />
The actual public expenditures in 2004 were<br />
US$ 9.6 billion. The increased revenues<br />
indicate that the government’s estimates of<br />
US$ 7.6 billion revenues were conservative<br />
and prudent, based on conservative oil price<br />
forecast of US$ 21.0 per barrel. The record<br />
revenues achieved in 2004 will help<br />
government continue its ongoing economic<br />
reform programs and other development<br />
initiatives. Oman’s external debt position<br />
comfortably stands at US$ 3.4 billion as<br />
against staggering debts of many other<br />
countries in the region. The excess of<br />
planned aggregate expenditure of US$ 9.6<br />
billion over budgeted revenue receipts of<br />
US$ 8.0 billion leaves a deficit of US$ 1.4<br />
billion for 2005. The deficit represents 17% of<br />
total revenues and 6% of GDP. The 2005<br />
current expenditure of US$ 7.2 billion<br />
accounts for 75% of total expenditures, with<br />
investment spending (US$ 2.3 billion) and<br />
support to private sector (US$ 171.9 million)<br />
taking the remaining 25%. The oil price<br />
estimated for 2005 budget at US$ 23 a barrel<br />
also seems lower than the expected actual<br />
realization.<br />
OMAN MACROECONOMIC ACTIVITY<br />
TRADE BALANCE (GOODS & SERVICES), NATIONAL INCOME PRODUCTS ACCOUNT (US$ Millions)<br />
1998 1999 2000 2001 2002<br />
Exports 5,797 7,638 11,743 11,423 11,767 E<br />
Imports 6,848 5,810 6,159 6,988 7,199 E<br />
Trade Balance -1,051 1,828 5,584 4,434 4,568 E<br />
* Economic Overview, Country Watch Incorporated, 2005