National Economy

                                          Sub Section:  current year"s Budget estimate

Oman enjoys a stable political, economic, and social system, which is enhanced by the excellent relationships between the Sultanate and neighboring countries. His Majesty, Sultan Qaboos, encourages market-orientated policies and private sector development as the mechanism for prosperity and growth.

Commercial export of oil began in 1967 and since Sultan Qaboos' accession to the throne in 1970, many more oil fields have been found and developed. In June 1999, Petroleum Development Oman (PDO) discovered a new oil field in southern Oman after drilling and testing three wells which demonstrated the commercial viability of the reservoir. This is the most significant find in five years. Work is continuing on the RO503.876 million (US$1,300 million)oil refinery project in Sohar,which is due to go into operation in 2006 with a 116,400 bpd refining capacity.In 2004 Oman Oil Refinery was supplied with about 78,200 bpd for refining,while PDO began using steam injection technology in several wells to increase their productivity.

Since the slump in oil prices in 1998/99, Oman has made active plans to diversify its economy and is placing a greater emphasis on other areas of industry, such as tourism and liquid natural gas. Oman's Basic Statute of the State expresses in Article 11, that, "The National Economy is based on justice and the principles of a free economy."

The Vision Conference: Oman 2020, held in June 1995, has developed the following aims with regard to securing Oman's future prosperity and growth:

• To have economic and financial stability

• To reshape the role of the Government in the economy and to broaden private sector participation

• To diversify the economic base and sources of national income

• To globalise the Omani economy

• To upgrade the skills of the Omani workforce and develop human resources

By 2020, it is expected that the economy will not be reliant on oil, but rather, will have diversified into non-oil sectors, raising higher levels of savings and investments

The crude oil sector's share of GDP is estimated to drop to 9% in 2020, compared with 41% in 1996

The gas sector is expected to contribute around 10% to GDP, compared with less than 1% in 1996

The non-oil industrial sector's contribution is expected to increase from 7.5% to 29%.
 

International economic recognition

 The joint report by the Arab states' chambers of commerce, industry and agriculture, published in June 2006, praised Oman's economic achievements in 2005. A report by the Global Investment House in

September 2005 paid tribute to the Omani government's economic policies, including its efforts to create a positive economic environment, promote economic diversification and raise the Sultanate's credit rating.

A 2005 report by Transparency International classed the Sultanate as the Arab state with the lowest level of administrative corruption and placed it 29th in the world out of a total of 159 states. No Arab state has previously attained such a high rating. The International Research Foundation and Canada's Fraser Institute awarded the 2005 prize for economic freedom in the Arab world to Oman on the basis of its economic freedom index assessment criteria, which put the Sultanate top out of the 16 Arab states taking part in the 2005 assessment. The Sultanate, together with Qatar and Lebanon, shared a prize for monetary policy awarded by the International Research Foundation and the Fraser Institute in November 2005. The World Bank's 2004 report on the rule of law and good governance put the Sultanate at the top of its list of Arab states and in its November report classified Oman as 17th out of 127 states around the world.

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