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Oman to see 2011 growth at 5pc, no bond plans

Jeddah, June 29, 2011

Oman's economy is expected to grow by 5 per cent this year if oil prices stay at current levels and the Gulf sultanate has no plans to issue sovereign bonds at present, its finance minister said on Wednesday.

"We are looking at 5 per cent (growth) as long as oil prices stay at current levels," Darwish al-Balushi told reporters on the sidelines of a financial conference in the Saudi port city of Jeddah.

Analysts polled by Reuters in June expected the sultanate's economy to expand by 4.1 per cent in 2011, unchanged from March forecasts.

The small non-Opec oil exporter plans to heavily invest in infrastructure projects in the coming years.

Oil prices have been hovering between $84 and $115 per barrel since the beginning of the year.

A Reuters poll in May showed analysts expected US benchmark crude to trade around $100 per barrel this year.

When asked if the government planned any sovereign bond issue this year, Balushi said: "No, not at present. When we prepare next year's budget ... we might be able to talk about any sovereign financing."

Oman, which issued only small development bonds in the past, has the lowest government debt among Gulf Arab oil exporters at a mere 5.1 per cent of its annual economic output in 2010.

In December, Oman projected a record expenditure of RO8.1 billion ($21.1 billion) in its 2011 deficit budget, up 13.2 per cent from the previous year's plan.

However, protests prompted Sultan Qaboos bin Said, who has ruled Oman for 40 years, to promise a $2.6 billion spending package in April. He also announced plans to create 50,000 new jobs among other measures.

A finance ministry official told Reuters in June that Oman expected 2011 spending to be about 20 per cent higher than previously planned due to extra spending on social programmes, but planned to reach a balanced budget.

When asked about next year's budget, Balushi said: "This year's budget is expansionary. The next year will depend on how we forecast the oil price.”

Oman's wealthier Gulf Arab neighbours unveiled a $20 billion aid package in March for the sultanate and unrest-hit Bahrain to help ease social tensions threatening stability in their own countries.

Balushi did not offer details on how the money was going to be spent or whether it was already received, saying the process was at early stages. – Reuters




Tags: Oman | economy | Jeddah | growth | bonds |

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