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Oman gearing up for further growth and prosperity

Oman gearing up for further growth and prosperity

It would appear the Oman corporate banking sector is in a far healthier position than it was a year ago, with figures indicating a “noticeable improvement in its performance”.

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Speaking at a press conference in Oman’s capital Muscat, which was held at the beginning of January, the country’s finance minister, Darwish bin Ismaeel al Balushi, outlined the government’s 2014 budget spending plans and described the banking sector’s performance as solid.

He said, “As regards monetary and banking developments in the Sultanate, data indicates that the situation of the banking sector remained solid, as the sector showed a noticeable improvement in its performance, as the balance of the total credit of commercial banks achieved a rise of 6.8 per cent by the end of October 2013 to reach RO 15.1 billion (US$ 39 billion) compared to RO 14.2 billion (US$ 36.9 billion) for the same period in 2012. Similarly, the balance of total deposits rose at a rate of about 11.1 per cent by the end of October 2013 to RO 15.3 billion (US$ 39.3 billion) compared to RO 13.8 billion (US$ 35.8 billion) for the same period in 2012.

“Data also indicates a decline in interest rates as it went down from 6.19 per cent at the end of 2011 to 5.46 per cent in October 2013. Interest rates will continue to decline in the Sultanate in line with the expectations of global interest rates in the coming period, thus contributing to support growth in bank credit and stimulate investment activity.”

The minister outlined the increased spending in the latest five-year development plan which will see additional projects across all sectors and greater opportunities for employment. The implementation of fiscal policy as a connected and continuous process was, he said, progressing steadily and on a balanced pace, taking into account the priority of social requirements. This would lead to the creation of a favourable atmosphere leading to more growth and prosperity.

A report produced by the influential Oxford Business Group (OBG) at the end of 2013 said the programme by the Omani government to pour billions into infrastructure to help support long-term economic diversification was benefiting the Sultanate’s construction sector, which will likely see its order books filled for years to come.

According to Paula Boast, a partner at the Bahrain office of legal firm Trowers & Hamlins, which has advised on a number of construction projects in the Sultanate, prospects for the building industry were encouraging.

“The message coming out of Oman is positive,” she told a construction industry seminar on November 10. “There is a good mix of active projects and projects coming on-line. It is good to note that the focus has been on key areas like infrastructure – social, economic, and civil – tourism and utilities and support. Infrastructure is a necessity; it drives commerce and industry, promotes economic growth and will put Oman on the international map.”

The construction sector is expected to grow by 6.3 per cent this year, according to Boast, significantly faster than the 5.1 per cent rise in overall GDP that the IMF has projected for Oman in 2013. The OBG report says some US$ 56 billion worth of projects are scheduled to be carried out between this year and 2017, and a further US$ 56 billion worth of developments through to 2022. The full OBG report is available here.