IMF: Economic diversification challenges Oman
The International Monetary Fund on Wednesday, April 11, urged authorities in Oman to continue diversifying the country's oil-dependent economy, and to boost employment opportunities for Omani nationals in order to preserve an economic recovery.
IMF executive directors, according to a summary of their recent evaluation of Oman's economy, credited the government with using its relatively limited oil resources "prudently for rapid social development and economic diversification over the past decade."
Nonetheless, the country remains heavily dependent on oil, which accounts for 40 percent of gross domestic product and about 70 percent of budget and export receipts, according to the Fund.
When oil prices plummeted in 1998 Oman suffered a major financial setback and sustained negative growth of one percent the following year. But higher oil prices in 2000 helped support a recovery and growth was expected to have reached 4.7 percent last year.
In the medium term, according to the IMF, authorities should carry on with efforts to develop gas-based industries and to promote tourism in an environment conducive to local and foreign investment.
"In view of the projected decline in oil prices in the medium term, and to ensure inter-generational equity in the distribution of oil and gas wealth, directors stressed the importance of further strengthening the fiscal position, particularly the non-oil sector," the summary said.
To increase revenue the Fund said the government should consider raising water and electricity fees to levels that can assure cost recovery.
While maintaining a flexible policy on hiring expatriate workers, according to the Fund, authorities should expand training and education opportunities to meet demands of the private sector "and thus promote the employment of nationals." — (AFP, Washington)
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com)