Oman govt spending to rise slightly next year
Abu Dhabi, October 22, 2011
Oman's government spending will rise slightly next year, after a sharp increase this year as the country boosted social spending, finance minister Darwish Al Balushi told Reuters on Saturday.
Al Balushi said budget spending this year would total about RO9.1 billion ($23.7 billion), up from an original plan of RO8.1 billion. The country increased spending after a wave of social unrest prompted by Arab Spring political protests across the region.
Next year's spending will be 'a little more' than RO9.1 billion, Al Balushi said, speaking on the sidelines of a meeting of Gulf Arab finance ministers and central bankers.
Protests demanding jobs and an end to corruption prompted Sultan Qaboos bin Said, a US ally 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.
Speaking to Reuters at the same meeting, the head of Oman's central bank said the non-Opec oil producer would issue a bond to fund development projects.
'The government is issuing a government development bond before the end of this year in the range of RO150 million,' Hamood Sangour Al Zadjali said. 'It is meant for the local market and issued by the government through the central bank.'
Oman's commercial banks are set to boost profits by about 10 per cent this year, driven by growth in loans and other core businesses, Al Zadjali said.
'The 0man banking system is resilient, strong and comfortable. Looking at Q3 profits, we will see upward growth in the region of about 10 per cent for 2011.'
Al Zadjali added that banks' loan books were growing at an annual rate of about 8 to 10 per cent at the end of the third quarter of this year, with deposits showing similar expansion.
He said the sultanate's first two fully fledged Islamic banks would be operational in early 2012. The two banks will raise 40 per cent of their capital through initial public offers of shares, he said.
Bank Nizwa and Al Izz International Bank, sponsored by local investors in Oman, have received licences from the central bank to operate as wholly Islamic financial institutions but have not yet opened their doors.
Other banks in Oman are free to open Islamic windows, Al Zadjali added.
He said Oman's banking sector had no 'direct' exposure to the euro zone debt crisis. 'Our banks have not borrowed funds nor kept large sums with them. Our banks are conservative,' he said.
Al Balushi said the Oman Investment Fund, the country's main sovereign wealth fund, would not alter its investment strategy to buy European assets made cheaper by the euro zone crisis.
'They (the fund) have a strategy where they invest in a sort of balance between the local investments and the foreign investments. And I think we will continue with that...It is something like 60 per cent in local and 40 per cent in foreign investments,' Al Balushi said. - Reuters