Global Arab Network | Oman: Developing infrastructure to encourage international investors

Translate this article to your language:

GANPublications

e-Publications

Add Site to Favorites

Add Page to Favorites

Make Homepage

Share This Page

RSS Feed

--------------------------------------------------------------------------------------------------------------------
| |

Oman: Developing infrastructure to encourage international investors

Friday, 26 March 2010 16:42

The Omani government has recently confirmed its commitment to developing the nation's infrastructure, in a move that will reassure contractors and institutional investors.

Speaking at the Oman Global Investment Forum on March 16, the minister of national economy, Ahmed bin Abdul Nabi Macki, told delegates that, "The government remains committed to continuing major development projects," adding that some OR937m ($2.43bn) had been budgeted for capital investment in 2010.

Incorporated in that figure are continued improvements to the Sultanate's transport infrastructure, including ports, roads and airport developments, as well as rail links to major industrial centres within Oman and neighbouring Gulf Cooperation Council states. Macki noted in particular the new port under construction at Duqm, as well as expansions to the existing port facilities at Sohar and Salalah.

Improving logistical links at these industrial zones is a major element of the government's current economic diversification strategy. Further logistical advances in these zones include new airports planned for Sohar and Duqm, as well as expansions to Salalah International Airport. Meanwhile, Muscat International Airport is also undergoing a revamp, while a new airport will be constructed at Ras Al Hadd.

Also at the conference, government officials predicted strong growth for 2010 of 6%, spurred by renewed bullishness on the oil markets and the continuing policy of diversification. These figures, if borne out, would represent an increase on last year's growth figure of 3.7%. According to Reuters news agency, analysts forecast government spending to rise by 12% and oil production to increase by 11% in 2010.

Oman is most likely to experience a return to inflation - albeit of a gentler variety than that experienced in 2008. January inflations figures were at a five-month high of 1.7%. However, the Central Bank's executive president, Hamood Sangour Al Zadjali, said at the conference that he expected inflation to rise to between 4 and 5% this year.

While worth keeping an eye on, inflation at these levels is unlikely to represent a threat to investment in the Omani economy. The anticipated bump will be a product both of renewed bullishness in global food prices, as well as domestic pressures resulting from the government's investment programme. The latter trend is likely to manifest itself predominately in modest asset price inflation.

In addition to recommitting the government to its investment programme, Macki was also keen to remind delegates that Oman had demonstrated a firm commitment in recent years to fiscal prudence, paying down the national debt from 34% of GDP in 1999 to only 5.6% last year. As a result, the Omani government remains in a strong position to engage in counter-cyclical stimulus. As Farouk Soussa, the head of Standard & Poor's Middle East government ratings, described the situation to the press, "Oman can run deficits of 10% of GDP in the next five years without drawing down its assets and there are very few countries that can do that." In light of these strong fundamentals, Moody's last month upgraded Oman's sovereign rating from A2 to A1.

Analysts nonetheless expect Oman's budget to register a fiscal surplus of 4% in 2010, meaning that, despite the government's additional spending, the public coffers will remain in robust condition. For international investors, it is clear that the availability of public funds and relatively low inflation are creating a favourable environment for business in the Sultanate.

Global Arab Network

This article is published in partnership with Oxford Business Group

< Prev		Next >

Last Updated on Friday, 26 March 2010 16:51

Add comment

The opinions of the authors in articles published are theirs alone and do not necessarily reflect the views of Global Arab Network
------------------------------------------------------------------------------
Published comments are the opinions of private individuals and do not reflect the views of Global Arab Network