Oman’s economy is expected to stage a smart recovery next year, with growth in gross domestic product seen at 4 per cent, according to a senior official at the Central Bank of Oman (CBO).

Speaking at a panel discussion on the performance of local economy organised by Thomson Reuters on Tuesday, Dr. Khalfan Mohammed Al Barwani, vice president, Financial Services and Operations, at CBO, said that according to a growth projection by the International Monetary Fund, the gross domestic product of Oman is expected to grow at more than 4 per cent in 2018, thanks to economic diversification programmes and prudent policies of the government.

“In 2017, we are seeing a little dip in terms of economic growth due to two reasons—a fall in oil production since Oman agreed to cut output along with OPEC and non-OPEC producers and a decline in government spending,” added Dr. Al Barwani.

He added that government expenditure fell by 6.1 per cent in the first seven months (January-July) of this year, compared with the same period of 2016.

Growth in foreign investment will also drive the country’s economic growth next year. Kuwait-based firm is investing in Duqm Refinery, while Chinese firms have committed $10 billion investment in Duqm. Also, the first phase of Khazzan tight gas field has started production, which will prop up growth of both gas-based industries and petrochemical ventures.

Elaborating on the recent trend of a decline in fiscal deficit, he said the budget deficit for the first seven months (January-July) of 2017 stood much lower at OMR2.5 billion, compared to OMR4 billion for the same period of 2016. “This is going to be sustained in the medium term. Economic policies have been changed to reduce deficit.”

The country’s fiscal deficit in 2016 stood at OMR5.3 billion, while it was OMR4.5 billion in the previous year.

Dr. Al Barwani said there are several infrastructure projects and development programmes in Duqm in the medium-to-long term.

Debt programmes

The CBO official also said that the recent debt issues of the Oman government were quite successful. “Our target in 2016 was to raise $2.5-$3 billion (from international markets), but we ended up with applications for almost $10 billion. (Similarly), early this year, our expectation was to raise $5 billion, but we ended up getting an offer of $20 billion,” he explained.

Dr Al Barwani also said that Tanfeedh (a national programme for enhancing diversification) has identified five sectors, including tourism, logistics and manufacturing, for fast diversification of the economy.

He also noted that the government is also planning to amend the Foreign Investment Law and Mining Law, which will help attract foreign investment.

The Thomson Reuters panel discussion on Oman’s economy was moderated by Andrew Torchia, chief financial correspondent, Reuters Middle East, and was attended by Manickam Palaniappan, head of strategy Development, Bank Muscat and Sribhashyam Srinivas, head of treasury and capital markets, Bank Dhofar.

Source:Timeofoman