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Oman boosted budgeted spending for its 2011-2015 development plan by a staggering 113 per cent to RO30 billion ($78 billion) as it expects high oil prices and the Gulf country is pursuing plans to sharply boost crude output.
Announcing the eighth development plan on Sunday, Oman’s Minister of National Economy Ahmed bin Abdulnabi Mekki said it would aim to create between 200,000 and 275,000 jobs for Omanis, who have become a majority in their country after they were a minority two decades ago.
“The plan envisages spending of RO30 billion, nearly 113 per cent above the budgeted spending in the previous plan,” he told reporters.
He said development expenditure would be as high as RO112 billion, including around RO5.6 billion for new projects and the rest for development plans and ventures that were approved during the seventh five-year scheme.
“The eighth development plan aims to provide between 200,000 and 275,000 jobs for nationals,” the Minister said.
At the end of 2009, Oman had around 2.017 million nationals, accounting for around 64 per cent of the country’s total population of 3.17 million.
Despite the relatively high number of its native population, Oman is still heavily reliant on expatriate workers but it has been locked in a drive to replace them with Omanis through incentives to the private sector.
Analysts said the high spending projected in the eighth development plan is based on expectations of strong oil prices and higher crude production by Oman, which is not a member of the Organization of Petroleum Exporting Countries.
In late 2010, Oman’s oil output climbed to its highest level in nearly eight years to reach around 900,000 bpd and is expected to rise further this year.
The surge in oil output is in line with its budget targets and is a result of a massive investment programme launched by the government to reverse a steady fall in its oil production in previous year due to lower field recovery rates.
In 2007, Oman approved an ambitious $10-billion programme to develop its oil and natural gas resources, which are officially estimated at around five billion barrels and 30 million cubic metres respectively.
The plan is designed to develop gas deposits and push up oil production to previous levels. Production began recovering in 2008, when it grew by nearly 6.5 per cent to 756,000 bpd from 710,000 bpd in 2007.
Mecki said the 2011-2015 plan is targeting real growth of three per cent, which experts believe is realistic and can be achieved.
In comments last month, he said real GDP growth in Oman’s seventh development plan for 2006-2010 sharply exceeded the targeted rate of three per cent despite the adverse effects of the 2008 global fiscal distress.
His figures showed real GDP growth stood at 5.5 per cent in 2006, around 6.8 per cent in 2007, as high as 12.8 per cent in 2008 and nearly 7.3 per cent in 2009. He forecast growth at around 6.1 per cent in 2010.
Official data showed Oman has spent nearly RO94 billion over the past 40 years, an average annual expenditure of around RO2.35 billion.
Spending covered education, health, electricity, water, roads, telecommunications and all other sectors as part of a massive construction drive triggered by the discovery of oil.
In statements marking Oman’s national day last month, Mecki said the steady rise in public spending over the past years had sharply expanded the country’s economy including the non-oil sector.
“Expenditure has totalled around RO94 billion since 1970….the country’s GDP has jumped by nearly 170 times by the end of 2009 to reach RO17.73 billion.”
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