30/03/2015 06:57 AST
Oman’s balance of payment position comfortable, says CBO — By Samuel Kutty — MUSCAT: March 29: Reflecting the Sultanate’s overall balance of payments position, which seems to have remained comfortable, the foreign assets of the Central Bank of Oman during the first three quarters of 2014 increased by 5.5 per cent to RO 6.471 billion compared to RO 6.133 billion at the end of December 2013. “Even with deficits in services, income and transfers account and outflows under capital and financial account, the overall balance of payments is expected to register a surplus in the first half of 2014 mainly due to large surplus in merchandise trade account”, the Central Bank says in its mid-year review of the Omani economy.
The estimated balance of payments position of the Sultanate of Oman pointed to a favourable condition during the first two quarters of 2014 despite marginally lower average Omani crude oil price and lower exports and imports.
According to the report, total merchandise exports during the period were lower by 9.6 per cent mainly due to lower oil exports and re-exports. Crude oil exports had declined by 9.2 per cent, while natural gas exports registered a fall of 14.2 per cent during the period. Oil and natural gas exports accounted for 66 per cent of total merchandise exports during the January-June 2014
Merchandise imports declined by 13.6 per cent during January-June 2014 mainly due to lower demand for re-export of mineral products.
The bulk of imports included mineral products, electrical machinery and mechanical equipment and transport equipment. There was a trade surplus of RO 4.4 billion during the first two quarters of 2014; lower by 4.1 per cent over the first two quarters of 2013
There was a marginal increase in non-oil exports by 3.2 per cent led mainly by mineral products and plastic and rubber products. Exports of plastic and rubber products increased by 34.3 per cent, while that of mineral products increased by 4.6 per cent. There was sharp decline of 20.8 per cent in re-exports during January-June, 2014.
“The recent trend in merchandise trade indicates that current account surplus in the first half of 2014 will be almost at the same level or marginally lower over the same period last year. The services, income and current transfers will continue to be in a deficit mode, given the nature of the Omani economy”, the report says.
On the capital and financial account front, it is expected that, “there will be net inflow mainly due to other investment on account of draw down on Government’s bank balances abroad. Component-wise, although firm data are not available on foreign investments, it is expected that there will be a very small outflow under foreign dirAect investment, while net inflows under portfolio investment will be higher”.
Oman is committed to a policy of open market economy based on free competition in which the private sector is encouraged and facilitated to play a leading role.
According to the Central Bank, the policy is to encourage foreign capital that will enhance the overall development of the country.
“In recent years, with very favourable investment climate, the Sultanate of Oman has emerged as an attractive destination for foreign direct investment due to its free market system, stable macroeconomic environment and political stability”, says the Apex Bank.
The Sultanate offers an investor-friendly legislative environment, flexible tax system and transparent corporate governance. Oman’s Foreign Capital Investment Law has been liberalised, permitting 70 per cent foreign participation in companies automatically in most of the sectors and even 100 per cent foreign capital investment is permitted for projects of national importance. There is low tax on profits and no personal income tax.
Oman Daily Observer
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