Sultan Qaboos stresses while chairing Council of Ministers meeting the importance of coordination between the public and private sectors

Sultan of Oman issues Royal Decree approving this year’s state budget

Minister of financial affairs highlights items in new budget

Very Large Crude Carrier (VLCC) added to Oman’s shipping fleet

His Majesty Sultan Qaboos bin Said, presiding over a cabinet meeting here on Sunday, ordered his government to place more emphasis on education and training of citizens.

He said extra attention must be given to the development of education and improve the potential of students graduating from schools, institutes, colleges and universities through training and HRD programs.

Sultan Qaboos voiced satisfaction over a series of steps launched in recent months to improve citizens’ standard of living and infrastructural facilities in the country.

He stressed the importance of promoting sustainable development and continuous contact between the government and private sectors, also noting that the newly-announced budget for 2012 met requirements of all sectors.

The Omani monarch spoke about the need to continuously review progress of development work in every field and to improve performance of the government sector. Clear-cut awareness programs, he said, should be launched to highlight development schemes implemented by the government and their positive impact on the society.

Sultan Qaboos has last week issued a Royal Decree as follows:

Royal Decree No. 1/2012 ratifies the State General Budget for fiscal year 2012.

Article one: Ratifies the State General Budget for the fiscal year 2012 according to the attached tables.

Article two: All ministries and government departments shall implement provisions of this decree, each within the scope of its jurisdiction.

The decree comes into force from January 1, 2012.

HE Darwish Bin Ismail Al Balushi, Minister Responsible for Financial Affairs, will hold a press conference on Monday to unveil the details of the state budget for 2012.

Revenue for 2012 budget is estimated at 8.8 billion rials compared to 7.3 billion rials in the 2011 budget. The expenditure is estimated at 10 billion rials, based on the oil price of $75 per barrel.

Despite the rapid regional developments and the euro zone crisis, the Omani economy achieved stability and growth and overcame the negative implications of the euro crisis in 2011 due to the sound economic policies, he said. The Sultanate’s GDP during the first 10 months of 2011 stood 6.959 billion rials compared to 5.835 billion rials in 2010.

The estimated expenditure for 2011 was set at 8.1 billion rials, but additional 1 billion rials were pumped in April to meet the expenditure as per the Royal Orders of His Majesty to improve the standards of living of citizens and the development of human resources. The realized budget surplus on Oct. 31, 2011 amounted to 830 million rials and the revenues also grew by 45 per cent to post 9.311 billion rials, Al Balushi said.

He added that the 12 per cent increase in the expenditure will help to boost the economic growth.

The sultanate of Oman announced Monday a $26-billion budget for 2012 with a deficit expected to reach $3.12 billion, or five percent of its gross domestic product.

Expenditure was projected to hit 10 billion rials ($26 billion), up 9.0 percent from 2011, and revenues estimated at 8.8 billion rials ($22.85 billion), said financial affairs minister Darwish al-Balushi.

Balushi told a news conference that oil and gas should account for 81 percent of the revenues, at a slightly conservative average price of $75 per barrel, and daily production of 915,000 barrels.

Oil production in the non-OPEC country reached 159.07 million barrels in the first half of 2011 with 878,800 barrels produced per day, up 2.6 percent compared with the same period last year.

The government plans to partly cover its budget deficit through issuing domestic bonds worth 200 million rials ($520 million), the minister said.

World oil prices, which currently hover at around $100 per barrel, helped Oman to register a budget surplus last year.

Oman reportedly booked a budget surplus of 830.1 million rials ($2.2 billion) in the first 10 months of last year, thanks to the high oil prices.

The budget lays out plans for the creation of 36,000 jobs in the public sector and military, in addition to 2,000 new work places in government companies.

The government created around 94,000 jobs in the same three sectors in 2011, a year that saw unprecedented protests by people demanding employment and an end to corruption.

Oman plans to boost budget spending by 26 percent in its five-year plan, which ends in 2015, to create jobs and improve living standards in the Gulf Arab oil exporter, its finance minister said on Sunday.

The sultanate, which was hit by protests demanding jobs and an end to corruption last year, has planned to spend OR43bn ($112bn) over five years.

However, Finance Minister Darwish al-Balushi told Reuters that the government has now decided to increase the planned amount to OR54bn to cover "additional obligations".

"It is the government's response to the social requirements such as providing jobs, social security and unemployment benefits," Balushi said.

Oman's five-year spending plans are usually evenly distributed, but it is not specified how much money will be injected into its oil-reliant economy each year. He did not say how the 2012 budget would be affected by the increase.

A finance ministry official, who did not want to be named, told Reuters the ministry was targeting an average budget growth of 7 percent a year in the next four years to 2015.

He declined to provide yearly plans, saying those would depend on oil production and prices.

Sultan Qaboos bin Said, a US ally who has ruled Oman for 40 years, promised $2.6bn in additional spending in April and announced plans to create 50,000 new jobs to defuse social tensions.

In September, Balushi told Reuters government spending should rise to OR9.2bn in 2011 from the initially planned OR8.1bn following the social measures.

In November, the consultative Shura Council approved the 2012 budget draft, estimating expenditures of OR10bn and revenue of OR8.8bn. State news agency ONA said earlier this month that Sultan Qaboos had signed the budget.

Oman forecast a fiscal deficit of 5.4 percent of 2010 gross domestic product in its 2012 budget, according to Reuters calculations based on an average oil price of $75 a barrel.

Its wealthier Gulf Arab neighbors pledged in March to provide $10bn in aid over 10 years to help the country address its social challenges. Government officials have said the first tranche was expected to arrive this year.

Analysts polled by Reuters in December expected the non-OPEC oil producer to post a fiscal surplus of 4.7 percent of GDP in 2012, after an estimated 6.7 percent in 2011, thanks to robust crude prices.

The government said in December it created 35,000 jobs in 2011 and pledged another 35,000 jobs for this year.

Analysts said Oman, whose debt to GDP is forecast by the IMF to be the lowest in the Gulf at 3.2 percent this year, will have no problem to meet the extra financial demands due to strong oil prices and higher crude production.

"Oman is now producing nearly 900,000 barrels per day from 820,000 bpd this time last year. My estimate is that it will achieve an average of $105 per barrel for its oil sales in 2011, and that is almost double from what it has based its 2011 budget on," said Khalid al-Saidi, analyst at Al Omaniya Financial Services Co.

The IMF projected that the minimum oil price which Oman needs to balance its budget will rise from $81 per barrel in 2012 to $105 by 2016. A Reuters poll in December forecast Brent crude prices to average $106 per barrel in 2012.

Meanwhile, Oman Shipping Company (SAOC) has added a Very Large Crude Carrier (VLCC) to its fleet of shipping vessels. The new ship named the DABA has a length of 333 meters, and a deadweight tonnage of 317,000 tons, allowing for plentiful cargo space. SAOC took delivery of the DABA last week in Ulsan, South Korea from Hyundai Heavy Industries Company (HHI).

The addition of the DABA brings SAOC’s number of VLCCs to eleven, with plans to add six more. HHI is under contract to deliver five VLCCs to SAOC and with the DABA’s delivery still has two more to provide.

SAOC, which delivers oil and gas products across the world, was incorporated in 2003, and is owned by the Omani government through the Ministry of Finance (80%) and Oman Oil Company (20%).

The shipping company currently maintains a fleet of 30 vessels that comprise a total cargo capacity of 4.6 million tons. With the company’s current push to increase its capabilities, and once the remainder of its new vessels are delivered, the fleet’s deadweight tonnage will increase to 8 million.

According to the SAOC company website, in 2010 they churned a profit of $19.5 million, with a turnover of $238 million, and possess total assets of $2.3 billion.