Oil production in the Sultanate during 2013 increased by 2.3 per cent to 343.8 million barrels, up from 336.2 million barrels during 2012. The daily average production increased to 941.9 thousand barrels during 2013 from 918.5 thousand barrels in the previous year. The Omani crude oil prices in the international markets averaged
Pressure on prices
The average inflation based on CPI for the Sultanate stood at 1.1 per cent during 2013, as compared to 2.9 per cent in 2012.
Despite overall low inflation witnessed in 2013 so far, the pressure on prices in terms of contribution to inflation could be mainly seen as coming from two commodity groups: 'Food, beverages and tobacco' and 'educational services'.
The provisional data on Sultanate's fiscal position pointed to a surplus of
The Budget also focuses on reducing the dependence on oil through enhancing the contribution of promising sectors like tourism, agriculture and fisheries.
The State General Budget for 2014 projects the total revenue of the State to increase by 4.9 per cent to
The projected budget deficit for the year 2014 is
The primary focus of monetary policy operations is to ensure appropriate level of liquidity so as to avoid any internal or external imbalances. Given that the monetary policies in the advanced economies continue to remain accommodative, it is expected that interest rate environment in the Sultanate will be supportive of growth.
Monetary management during the year so far continued to be confronted with abundance of bank liquidity and the need to mop up the excess liquidity took centre stage. Broad money supply M2 registered an annual rise of 8.5 per cent on a year-on-year basis in 2013 as compared to an increase of 10.7 per cent during the previous year. Year-on-year, total credit expanded by 6.0 per cent in 2013 to
Aggregate deposits held with commercial banks registered a significant increase of 10.0 per cent to
The CBO's liquidity injection policy rate, i.e., the repo rate, remained unchanged at one per cent since
The CBO's policy interest rate for absorption of liquidity in the form of CBO CDs of 28 days maturity increased from 0.09 per cent in
With respect to domestic interest rate structure of commercial banks, both deposit and lending rates softened during this period. The weighted average interest rate on OMR deposits declined from 1.316 per cent in
The banking sector in
As regards Islamic banking,
The financial markets in the Sultanate continued to remain stable. The overnight domestic inter-bank call money rates declined to 0.12 per cent per annum in
The MSM 30 index at the end of 2013 had increased by 18.6 per cent over the previous year.
The market capitalisation increased by around 21.4 per cent to reach
Balance of payments
The balance of payments position of the Sultanate of
Merchandise trade surplus stood marginally higher at
The recent trend in merchandise trade indicates that the current account surplus in the first half of 2013 will be almost at the same level or marginally higher over the same period last year.
The future prospects of the Omani economy in general remain promising, taking into account the pace of economic diversification, favourable oil prices, sustained domestic demand, accommodative monetary policy, large expenditure planned by the government and the role of the private sector in the development process.
Savings and investment
The country has a fairly well developed physical infrastructure that continues to witness rapid expansion and improvement. The government has continued to stimulate growth by allocating large expenditure for completion of infrastructure projects, such as airports, sea-ports, roads, developing the industrial estates, water and wastewater projects.
The advent of Islamic banking is expected to further diversify banking services and expand financial inclusion. All these efforts by the government and the CBO have resulted in significant acceleration and percolation of growth with economic diversification and increase in employment opportunities. These factors are expected to remain favourable in the coming years.
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