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Oman

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Politics:

  • Analysis

    Oman politics: Quick View - Sultan pardons activists

    Event

    Oman's ruler, Sultan Qaboos bin Said al-Said, has issued a pardon for all those convicted of defamation, illegal gathering and cyber-crimes since the crackdown on freedom of speech began in the middle of 2012.

    Analysis

    There is a long history of the sultan issuing pardons, including for those convicted of plotting directly against him, so the announcement does not come as a great surprise. Furthermore, the sultan is unlikely to have felt comfortable with the international criticism that the cases have attracted.

    What is surprising, perhaps, is how long the situation has been allowed to continue before the pardons were issued. The authorities must have felt that it was imperative that those convicted-more than 50 of them-be seen to be punished, by way of a warning to others. The official press release from the Oman News Agency said, somewhat ominously, that the inmates had undergone "reformative and rehabilitation" programmes.

    The authorities may also have concluded that it was better to pardon the activists before they won any further victories. More than 20 imprisoned activists went on hunger strike throughout February after the Supreme Court deferred a decision about whether it would take up the cases of the 11 Omanis convicted of illegal gathering, having rejected a plea to suspend their sentences. When, in late February, as the hunger strikers' health worsened, the Supreme Court announced a date for the appeals to be reconsidered, and the strike was called off, it was inevitably seen as a victory for the activists. (The Supreme Court went on to decide in early March that the appeals of eight of the 11 should be reheard, and they were released just before the pardon was announced.)

    March 22, 2013

  • Background

    Oman: Key figures

    Sultan Qaboos bin Said al-Said

    Since 1970, both in theory and in fact, decision-making has been heavily concentrated in the hands of Sultan Qaboos. As well as being head of state, he is prime minister, commander-in-chief of the armed forces, foreign minister, defence minister and finance minister.

    Ali bin Majid al-Maamari

    Palace Office affairs minister and head of the Defence Council, Mr Maamari is a powerful behind-the-scenes player in Oman, overseeing matters of internal security. His long tenure in office is a mark of the sultan's personal trust, which extends to giving him a decisive role in ensuring a smooth succession process.

    Youssef bin Alawi bin Abdullah

    Although the sultan formally holds the foreign affairs portfolio, Mr Abdullah is trusted with the day-to-day management of policy. He has held the position of minister responsible for foreign affairs for more than a decade.

    Haithem bin Tariq al-Said

    A first cousin of the sultan, Haithem al-Said is one of the three members of the royal family mooted as possible successors. He was promoted to the cabinet in 2002, as the national heritage and culture minister, but the position affords him little opportunity to build a power base from which to challenge the sultan.

    Shihab bin Tariq al-Said

    Shihab al-Said is Haithem al-Said's brother and another possible successor to the sultan. In 2004, following several years as commander of the Omani Royal Navy, he was promoted to become a personal representative of the sultan.

    Assad bin Tariq al-Said

    Special representative for the sultan and widely seen as his most likely successor, Assad al-Said is brother to Shihab and Haithem. His current position involves a range of ceremonial duties, as well as travel delivering messages on behalf of the sultan. Until early 2002 he headed the higher committee of conferences, before which he served as head of the armoured corps, attaining the rank of Brigadier-General.

    June 01, 2007

  • Structure

    Oman: Political structure

    Official name

    Sultanate of Oman

    Form of state

    Monarchy

    Legislature

    There is no national legislature, but the Council of Oman debates policy and was given some legislative powers in October 2011. It comprises the 84-member Majlis al-Shura (Consultative Council) and the Majlis al-Dawla (State Council), whose members were appointed in November 2007

    Elections

    The Majlis al-Shura was elected by universal suffrage in October 2011. The next election is in October 2015

    Head of state

    Qaboos bin Said al-Said assumed power in July 1970

    Executive

    The sultan rules by decree, assisted by the Council of Ministers (cabinet). The most recent cabinet reshuffle was in March 2011

    Main political parties

    Political parties are not permitted

    Adviser of the sultan

    Shihab bin Tariq al-Said

    Personal representative of the sultan

    Assad bin Tariq al-Said

    The government

    Prime minister, minister of defence, finance & foreign affairs: Qaboos bin Said al-Said

    Deputy prime minister for cabinet affairs: Fahd bin Mahmoud al-Said

    Key ministers

    Agriculture & fisheries: Fuad bin Jaafar bin Mohammed al-Sajwani

    Awqaf & religious affairs: Abdullah bin Mohammed al-Salimi

    Commerce & industry: Ali bin Masoud al-Sunaidy

    Defence affairs: Badr bin Saud al-Busaidi

    Diwan of the Royal Court: Khalid bin Hilal al-Busaidi

    Education: Madiha bint Ahmed al-Shibaniyah

    Environment & climate affairs: Mohammed bin Salim bin Said al-Toobi

    Financial affairs: Darwish bin Ismail al-Balushi

    Foreign affairs: Youssef bin Alawi bin Abdullah

    Health: Ahmed bin Mohammed al-Saidi

    Heritage & culture: Haithem bin Tariq al-Said

    Higher education: Rawya bint Saud al-Busaidi

    Housing: Saif al-Shabibi

    Information: Abdulmunem bin Said al-Hasani

    Interior: Hamoud bin Faisal al-Busaidi

    Justice: Abdulmalik bin Abdullah bin Ali al-Khalili

    Legal affairs: Abdullah bin Mohammed al-Saidi

    Manpower: Abdullah bin Nasir al-Bakri

    Oil & gas: Mohammed bin Hamad al-Rumhi

    Municipalities & water resources: Ahmed bin Mohammed al-Shuhi

    Social development: Mohammed bin Said bin Saif al-Kalbani

    Sports affairs: Saad bin Mohammed bin Said al Saadi

    Tourism: Ahmed bin Nasser bin Hamad al-Mehrzi

    Transport & communications: Ahmed bin Salim al-Futaisi

    Central Bank executive president

    Hamood Sangour al-Zadjali

    March 15, 2013

  • Outlook

    Oman: Key developments

    Outlook for 2013-17

    • The monarchy will remain in power over the forecast period. To prevent a repeat of the protests of 2011, it will enact political and economic reforms, as well as increase wages further and create public-sector jobs for Omanis.
    • Oman will maintain its military ties with the West, while nurturing cordial relations with Iran. However, if there is a military confrontation between the West and Iran, Oman, under the GCC umbrella, may be forced to take sides.
    • Fiscal policy will remain expansionary to support economic development and limit protests. As a result, the Economist Intelligence Unit forecasts that the budget surplus will narrow sharply in 2013-17, to an average of 2% of GDP.
    • Oil and gas development remains a priority, but the government will also push ahead with its economic diversification programme. This will focus on infrastructure and port development, downstream oil activities and tourism.
    • Strong domestic demand, an expansionary fiscal policy and gains in the non-oil economy will ensure that economic growth is robust, averaging 5.1% in 2013-17. However, growth remains vulnerable to a downturn in oil prices.
    • We forecast that inflation will average 3.7% a year in 2013-17. This is much lower than in 2007-08, but still high by historical standards, as expanding government spending and strong domestic demand will push up prices.
    • The current account will maintain a healthy surplus, at an average of 5.2% of GDP in 2013-17, as it will closely follow oil price movements.

    Review

    • A group of imprisoned activists, jailed in 2012 for lese-majesty and unlawful assembly, has ended a two-week hunger strike after a date was announced for their appeal to be heard by the Supreme Court.
    • Nominal GDP in January-September 2012 was 13% higher than in the same period of 2011. Petroleum activities (oil and gas) registered year-on-year growth of 11.2%, while non-petroleum activities expanded by 13.2%.
    • A tender for a feasibility study on a proposed causeway linking Masirah Island with Shanna on mainland Oman has been launched by the Ministry of Transport and Communications.
    • Contracts worth more than US$2.5m have been awarded to local small and medium-sized enterprises by a Brazil-based mining giant, Vale, which has operations in Oman.
    • Nearly two years after Oman's ruler, Sultan Qaboos bin Said al-Said, announced that Islamic banking would be allowed in the country, sharia-compliant operations have finally begun.

    March 15, 2013

Economy:

  • Background

    Oman: Population

    Population by origin, 2005
    (m)
     OmaniNon-OmaniTotal
    Population1.8430.6662.509
    Source: Ministry of National Economy.

    Download text file (csv format)

    Unemployment is a growing concern as Oman has a young population, with almost 55% of citizens under the age of 20 and 83% under the age of 35. Economic development and perceived better job prospects in cities have gradually attracted young Omanis to urban areas. The 2003 census recorded just over 70% of the population as "urban", and showed that more than half now live in the area around the capital, Muscat. Other major population centres include the Dhofari port of Salalah and the northern towns of Sohar, Nizwa and Sur.

    The bulk of the Omani population is Muslim. The ruling family and a substantial proportion of ordinary citizens adhere to Ibadhism, a breakaway sect of Shia Islam. Most of the rest of the population is Sunni, although there are some Shia, mainly in the capital area. The "Basic Law" specifies that the sultan must be a Muslim, but ordinary Omani nationals are subject to no such requirement; indeed, one prominent trading family is of Indian Hindu descent. As a result of Oman's trading history, the country is a mixture of races. Slavery existed in living memory, and some former slaves still live as retainers to the families they previously served.

    June 01, 2007

  • Structure

    Oman: Economic structure

    Data and charts: Annual trends charts


    March 15, 2013

  • Outlook

    Oman: Country outlook

    Oman: Country outlook

    FROM THE ECONOMIST INTELLIGENCE UNIT

    POLITICAL STABILITY: The long-established structures of political power in Oman are expected to remain in place over the forecast period. Oman's ruler, Sultan Qaboos bin Said al-Said, still commands wide popular support, shored up by the loyalty of the security services and the strength of the country's traditional social structures. Moreover, Sultan Qaboos has initiated political and economic reforms in response to protests in the first five months of 2011. The most important political measure involved the granting of legislative powers in October 2011 to the Majlis al-Shura (Consultative Council) by amending the Basic Law of State. However, criticism of the authorities and the sultan himself has increased since June 2012, and the arrest and conviction in June-December of a number of bloggers and activists who had been demanding greater political reform is an indication that the government is attempting to clamp down on freedom of expression. If heavy-handed, this could prove counterproductive. Although protests of the magnitude seen in Sohar in 2011 have come to a halt, further demonstrations are likely, pressing for greater job creation or faster political reform, including in the sphere of freedom of expression. The political reforms that have been implemented so far suggest a desire to shift gradually away from a system of absolute monarchy towards a constitutional monarchy (although the present system is still a long way short of the latter arrangement).

    ELECTION WATCH: The Council of Oman (parliament) comprises the Majlis al-Dawla (State Council) and the Majlis al-Shura. Members of the Majlis al-Dawla are appointed by the sultan for a four-year term. Members of the 84-seat Majlis al-Shura are elected for a four-year term by universal suffrage. The election was held on October 15th 2011. Two days afterwards, the sultan amended the Basic Law of State, granting some legislative powers to the Majlis al-Shura, which, together with the Majlis al-Dawla, is now able to propose draft laws and refer them to the government for assessment. The next Majlis al-Shura election is due to be held in October 2015. Municipal elections took place in late December 2012, with around 1,500 candidates contesting seats in 11 new municipal councils.

    INTERNATIONAL RELATIONS: Oman's ties with its most important international allies--the US and the UK--will remain strong in 2013-17. Relationships with Asian countries, especially India, will become increasingly important owing to trade and investment. Oman will closely monitor relations between the West and Iran over the latter's nuclear programme. The sultanate has a long-standing diplomatic approach and continues, so far, to strengthen its relations with the West while maintaining cordial relations with Iran. Oman has also played an active role in facilitating the release of US and European citizens who have been detained by Iran. However, if tensions between the West and Iran escalate, Oman will find it hard to sustain a neutral stance, particularly given the fact that the US and the UK have military facilities on Omani territory.

    POLICY TRENDS: The government will continue to pursue reforms aimed at diversifying the economy away from oil and gas and promoting non-oil exports. To facilitate non-oil exports, it will increase spending on expanding the downstream sector and on infrastructure projects, including the development of tourism, ports and railways. Piracy in Omani waters has increased in recent years, and if attacks on oil tankers occur frequently there is a risk that this might hinder port development. The latest five-year development plan (2011-15) allocates more than OR8bn (US$20.8bn) to infrastructure development. Investment in expanding crude oil production will continue through the use of enhanced oil recovery techniques, but the Economist Intelligence Unit forecasts that, after a 2.3% expansion in 2013, the growth rate of crude production in 2014-17 will decelerate. Increased investment in energy-intensive industry and new power generation capacity has put more pressure on gas supplies, but the government realises this and is committed to increasing gas output by developing new gas-processing plants. The government will also be more stringent in prioritising the allocation of gas supplies to large projects. There is a move to consolidate the two state-owned liquefied natural gas (LNG) producers to reduce costs and make the companies more competitive on an international scale. This policy of consolidation may be applied to other state-owned energy players if the merger proves successful. The development of alternative sources of energy is expected to pick up from a low base, but the government is prioritising further gas exploration, which is expected to yield large gains in gas output after 2017.

    ECONOMIC GROWTH: We estimate that real GDP grew by 5% in 2012, driven by rising hydrocarbons output as well as an expansion in the non-oil economy. In 2013-17 oil activity will continue to dominate the economy, but average daily oil production will expand only moderately, by around 1.5% annually--compared with an annual average of 5.7% in 2008-11 and a rise of nearly 4% in 2012. Oil export growth will be modest over the forecast period as domestic consumption rises. Omani oil exports would not be directly affected if Iran were to follow through with its intermittent threat to close the Strait of Hormuz, as Oman's oil export terminals are located on the Arabian Sea. Strong growth in non-oil production will compensate for some of the weakness in oil production. High domestic demand, an expansionary fiscal policy and gains in the non-oil economy will ensure that economic growth is robust, averaging 5.1% in 2013-17.

    INFLATION: Inflation is constrained by the government's extensive subsidy system, which holds in check the prices of a range of core goods and services. The implementation of a more cost-reflective power tariff for industrial and comm.ercial users is still to be approved by the Council of Ministers and its impact on inflation will depend on how successful the authorities are in making customers pay the true cost for their power usage. Inflation averaged 2.9% in 2012, kept in check by virtually flat prices for electricity, water and fuel. We forecast average inflation of 3.7% a year in 2013-17 (fairly high by Omani standards) given strong growth in domestic demand, upward pressure on wages (the minimum wage for private-sector workers is set to increase by a further 63% in July) and gradual increases in electricity and gas prices for businesses.

    EXCHANGE RATES: We do not expect the fixed exchange rate of OR0.385:US$1 to come under pressure in 2013-17. The Central Bank of Oman is committed to the peg, which it has maintained since 1986. According to our calculations, in real effective terms the exchange rate is set for modest appreciation over the forecast period, after depreciating mildly in 2010-11. In March 2012 the IMF in its concluding statement under its regular Article IV consultations considered Oman's exchange-rate regime appropriate and in line with fundamentals. The outlook for Oman's external accounts and foreign asset levels is sufficiently robust to enable the Central Bank to defend the peg. Oman's decision not to join the mooted GCC currency union also means that the peg is less likely to be adjusted in response to any revaluations of the currencies of the other Gulf countries.

    EXTERNAL SECTOR: We estimate that the trade surplus remained large at US$25.5bn in 2012 and project a slight fall in 2013, with dated Brent crude forecast to decline to US$104.5/barrel from US$112/b in 2012. The trade surplus will remain substantial throughout the forecast period, although the impact of high oil prices will be moderated by the slower pace in the growth of crude production. Overall, we forecast that export revenue will increase by an annual average of around 8% in 2013-17, supported by the continued development of Oman's sea ports, which will increase re-export trade.

    March 08, 2013

  • Forecast

    Oman: 5-year forecast summary

    Outlook for 2013-17: Forecast summary

    Forecast summary
    (% unless otherwise indicated)
     2012a2013b2014b2015b2016b2017b
    Real GDP growth5.05.14.85.35.25.0
    Oil production ('000 b/d)919940945954960965
    Crude oil exports (US$ m)30,26628,77929,16030,02230,88432,352
    Consumer price inflation (av)2.93.43.53.64.03.8
    Lending rate5.95.95.96.16.26.2
    Official net budget balance (% of GDP)c9.22.62.31.91.61.6
    Unofficial gross budget balance (% of GDP)d9.63.53.02.41.92.0
    Exports of goods fob (US$ bn)52.052.155.861.267.274.9
    Imports of goods fob (US$ bn)26.529.533.638.142.648.1
    Current-account balance (US$ bn)9.25.74.24.35.46.5
    Current-account balance (% of GDP)11.86.94.74.34.95.3
    External debt (year-end; US$ bn)9.910.411.011.612.212.9
    Exchange rate OR:US$ (av)0.385e0.3850.3850.3850.3850.385
    Exchange rate OR:€ (av)0.494e0.5110.5050.4880.4840.485
    Exchange rate OR:¥100 (av)0.481e0.4150.4070.3990.3940.398
    Exchange rate OR:SDR (av)0.612e0.5920.5860.5800.5710.572
    a The Economist Intelligence Unit estimates. b The Economist Intelligence Unit forecasts. c Excludes State General Reserve Fund operations. d Includes State General Reserve Fund operations. e Actual.

    Download the numbers in Excel

    Download text file (csv format)

    March 15, 2013

Country Briefing

Land area

309,500 sq km

Population

2.77m (2010 Ministry of National Economy mid-year estimate), including 816,000 expatriates

Main regions

Population (2009)

Muscat (capital): 775,878

Dhofar: 249,729

Al Batinah: 772,590

Al Dhahirah: 151,664

Al Sharqiyah: 350,514

Al Buraymi: 72,917

Al Dakhiliyah: 326,651

Al Wusta: 42,111

Musandam: 31,425

Climate

Coastal areas, especially Batinah and Muscat: very hot and humid in summer; winters mild. Interior desert: summers hot and dry; winters cool. Dhofar receives monsoon rains in June-September

Weather in Muscat (altitude 5 metres)

Hottest month: June, 31-38°C (average daily minimum and maximum). Coldest month: January, 20-25°C. Driest months: July and August, 1 mm average rainfall. Wettest month: January, average rainfall 28 mm, but considerably higher on Hajar Mountains in the interior

Languages

Arabic; English, Urdu, Baluchi and Swahili are also widely used

Measures

Metric system

Currency

Omani riyal (OR) = 1,000 baisa. The currency is pegged to the US dollar at OR0.3845:US$1

Time

4 hours ahead of GMT

Public holidays

The Islamic holidays-Mawlid al-Nabi (the birthday of the Prophet, February 4th 2012), Eid al-Fitr (end of Ramadan, August 19th 2012), Eid al-Adha (Feast of the Sacrifice, November 6th 2012), Islamic New Year (November 15th 2012) and-are public holidays, the dates of which vary according to the lunar calendar and are therefore approximates. New Year's Day (January 1st), National Day and birthday of Sultan Qaboos (November 18th), and New Year's Eve (December 31st) are also public holidays


January 08, 2013

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