ECONOMY

From the day he assumed the reins of power on 23rd July 1970, Sultan Qaboos
bin Said stressed the need for development. Progression was to be achieved
through maximising Oman’s generous oil revenues in a series of ongoing Five-
year Development Plans, which would diversify the country’s sources of income
and steadily increase revenues.
In 2007 the Sultanate’s GDP rose to RO15.5 billion, up 12.9% from RO13.7
billion in 2006. This increase was due in part to the rise in oil price windfalls
but chiefly to the growth-friendly climate created by the government’s evolving
economic and monetary policies. Stronger local demand and improved performance
in the non-oil exports sector also played a significant role.
All the country’s major economic activities have contributed to this growth.
The added value of operations in the oil sector rose by 7% as a result of oil price
rises and increasing demand for natural gas, while non-oil activities recorded an
encouraging increase of 18.3%.
In 2007 the total value of commodity exports rose to RO9.5 billion – a 14.5%
rise over the 2006 figure of RO8.3 billion. Commodity imports in 2007 totalled
RO6.144 billion – up 46.6% from the RO4.19 billion recorded in 2006. The value
of re-exported goods rose by 30.9% to RO1.003 billion in 2007 – up from RO766.7
million in 2006.

A rise in revenues
In 2007 the government’s revenues increased by 16.6 % compared with the
previous year – from RO4.979 billion to RO5.806 billion – reflecting the success
of efforts to bolster the performance of the national economy and significantly
exceeding the projected budget revenue figure of RO4.49 billion.
This rise comes as a result of an increase in all the budget’s revenue items,
particularly oil, which jumped from RO3.225 billion in 2006 to record RO3.628
billion in 2007, following the increase in the price of a barrel of Omani crude from
an average $61.69 in 2006 to $65.15 in 2007.
The 2007 budget had conservatively estimated that net oil revenues would
reach RO3.015 billion, gas revenues RO550 million and current revenues
RO890 million. In the event, market forces provided the treasury with a welcome
windfall.
In 2007 the Sultanate raised its public spending to over RO5.371 billion – up
8.8% from RO4.936 billion in 2006. The General State Budget’s initial surplus
for that year totalled RO434.3 million, compared with the 2006 figure of RO43.8
million. The approved budget for 2007 provided for a deficit of RO 400 million.
In the 2007 budget the government’s original spending plan was for RO4.89
billion. However, the rise in revenues encouraged it to increase its spending and
the accumulated General State Budget surpluses were used to finance a range of
infrastructural projects, boost the state’s reserves and pay off the government’s
accumulated debts to the pension funds.

The 2008 budget

The 2008 budget is in line with government plans to reinforce the infrastructure
and spread the benefits of development throughout the country. It is also the
largest budget in the Sultanate’s history in terms of both revenue and expenditure.
Projected revenues topped RO5.4 billion, projected spending RO5.8 billion and
the projected deficit RO400 million. In the 2007 budget, estimated spending was

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 Government Revenues (Million RO)
5,806,2

4,979,9

4,510,5
4,040,2

3,305,3
3,009,5
2,539,8
2,289,9

2000 2001 2002 2003 2004 2005 2006 2007

General Expenditure (Million RO)

5,371,9
4,936,1

4,207,6
3,809,9

3,188,9
2,860,2 2,939,5
2,656,2

2000 2001 2002 2003 2004 2005 2006 2007

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 Gross total national income (Million RO) 13,069,7

11,136,8

9,182,9

7,932,9
7,325,3 7,429,1

2001 2002 2003 2004 2005 2006

Share per person from gross total national income (RO)

5,072

4,439

3,801
3,403
2957 2,927

2001 2002 2003 2004 2005 2006

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 RO4.89 billion, estimated revenues were RO4.49 billion and the estimated deficit
was RO400 million. The price of crude was estimated at $45 per barrel in the 2008
budget, compared with $40 per barrel in the 2007 budget.
The government is committed to helping to build a strong, competitive
economy capable of adapting to the rapid changes taking place around the world
and responding to the country’s present and future needs. The 2007 rise in the price
of oil means the General State Budget is not expected to show a deficit; a surplus
is more likely, particularly since the average price of a barrel of Omani crude has
been calculated at $45 while the real figure during 2007 and the first half of 2008
topped $100 per barrel. However, the global crunch of 2008 and corresponding
downturn in oil prices will prompt shifts in the mrket.

National per capita income

The per capita share of the country’s gross national income in 2006 rose to
RO5,071 up from RO4,439 in 2005 – a 14.2% increase. This rise is a direct result
of the increase in Oman’s gross national income in 2006 to RO13.069 billion – a
17.4% rise on the 2005 figure of RO11.136 billion.

The Five-year Plans

The Sultanate’s policy has been to develop its economy and generate prosperity
through a series of Five-year Plans, which are under constant review.
The first year of the Seventh Five-year Plan was in 2006 – the biggest Plan
in Oman’s history and the third ‘link’ in the approved long-term development
strategy for the period from 1996 to 2020 as envisaged in the 2020 Vision for
Oman’s Economic Future.
Under the 2006-2010 Plan, the Sultanate aims to achieve growth rates (at fixed
prices) averaging not less than 3% per annum, while boosting living standards and
maintaining low rates of inflation.
The Plan’s main economic focus is on controlling public spending to ensure
that it remains at sustainable levels. Boosting non-oil revenues and according top
priority to increasing the productivity of all the economic sectors, particularly oil
and gas, while increasing oil reserves by supporting and promoting new exploration,
is a designated priority. There are also moves to improve the efficiency of the
state’s administrative apparatus and tighten controls over its performance.
The Plan also makes provision for growth in the tourist, fishing and industrial
sectors, as well as for efforts to encourage exports and promote Omani products
in global markets. In this connection, it aims to continue modernising the
infrastructure and export-related facilities at seaports and airports, work actively to
promote bi-lateral partnerships with economic blocs around the world, encourage
domestic and foreign private sector investment, and employ money gained from
the privatisation programme to improve the operation of the private sector.

The civil ministries’ development programme

The funds originally approved for the Seventh Five-year Plan were around
RO3.016 billion, and between the start of the Plan at the beginning of 2006 and the
end of November 2007 a further RO2.357 billion was approved for a number of
additional projects, raising the total volume of funds approved for the development
programme by 78% to RO5.373 billion.
These additional sums were approved on His Majesty Sultan Qaboos bin
Said’s instructions during His Majesty’s royal tours of the country, for various
development projects and infrastructural restoration work following the damage

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