Oman's macroeconomic performance remained positive in 2001, leading to an additional accumulation of resources into the State General Reserve Fund (SGRF), reported the Executive Board of the International Monetary Fund (IMF).
According to the IMF’s Article IV Consultation with Oman, an increase in liquefied natural gas (LNG) exports by $700 million to about $1.2 billion partially offset lower crude oil revenue and higher imports of both consumer and capital goods, with the external current account surplus narrowing by 5.5 percentage points of gross domestic product (GDP) to about 12 percent. Meanwhile, following the repayment of LNG and government debt, the external debt dropped below 30 percent of GDP at the end of 2001.
The Board reported that economic activity continued its recovery during 2001 amid negative inflation. Real GDP growth is estimated to have increased to more than seven percent underpinned by rising LNG export volumes.
Non-hydrocarbon growth also accelerated to 7.5 percent from about three percent in 2000, mainly spurred by investment in new power plants and infrastructure and higher private consumption.
In contrast, crude oil output remained flat, as the country-an independent oil producer-has supported an Organization for Petroleum Exporting Countries (OPEC)-led effort to stabilize oil prices since 2000. With Oman operating within a framework of an open trade regime and a pegged exchange rate fixed to the US dollar, inflation remained negative in 2001, as a result of a further drop in import prices in U.S. dollars.
The Board’s Directors were encouraged by the favorable fiscal performance in the face of lower oil revenues. They considered that maintaining a strong fiscal position will be important to support the development strategy. Directors saw scope for further revenue-enhancing measures and a re-orientation toward productive expenditures.
Measures that would broaden the revenue base in the short run include an increase in subsidized water and electricity tariffs, the elimination of customs duty exemptions and tax holidays, and the introduction of a sales tax on luxury items.
Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions in Oman each year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
