Govt debt declines below RO900m
The total external and domestic debt of the country fell below RO900 million, which is only 4.2 per cent of the country's gross domestic product (GDP), said a senior official of the Ministry of National Economy.
"The Sultanate's debt-to-GDP ratio is one of the lowest in the world, according to a survey conducted by 'The Economist' recently," Abdul Malik bin Abdullah Al Hinai, undersecretary for Economic Affairs at the Ministry of National Economy told Times of Oman.
"It is expected to further drop to 3.5 per cent next year."
Al Hinai said that the main purpose of government development bonds, floated in the domestic market, is to mop up excess liquidity, and thereby stabilise the financial system. "The government issues bonds with the objective of stabilising liquidity within the market, and not just for raising money for funding projects," he said, adding, "Whenever a development bond matures, government floats an issue to repay the money."
The Central Bank of Oman (CBO) has floated a RO100 million government development bond issue. The bonds, with a maturity of four years and a coupon rate of 3.25 per cent per annum, closed subscription on November 4, while the auction will be held on November 8.
Referring to government expenditure, Al Hinai said that the spending so far is in line with budget proposal. "We are in the right direction â€¦â€¦. We are neither overspending nor under-spending. If you see the first six months, there was only a slight growth in government expenditure so far," said Al Hinai, adding; "In the first seven months of this year, the total government spending was slightly more than RO 3.5 billion, which is against a budgeted expenditure of RO 7.18 billion for the entire year."
Saying that there is no delay in awarding major projects, he said that some of the mega projects need time for evaluation.
"For instance, we are on schedule as far the Duqm projects are
Major infrastructure and other projects in Duqm like an airport, a port, a dry dock and roads are all progressing as per schedule. "In fact, the dry dock will start operation early next year."
Al Hinai also expressed confidence in achieving a budget surplus by the end of the year, which is against a planned deficit of
"We expect a surplus by the end of the year, after eliminating the projected deficit," he said. This is mainly due to the soaring oil prices, which averaged around $77.5 per barrel for the first seven months of 2010, as against an assumed price of $50 a barrel, on which the government revenue was estimated. The state revenue for the first seven months was RO4.2 billion, which is against a budget estimate of RO 6.3 billion for the whole year.Published on Saturday 6th of November 2010 10:45:08 AM Oman Time