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Oman may raise government spending in 2012
Oman has no plan to issue sovereign bonds in 2012; Worsening of Iran tensions could have severe impacts; UAE c.bank gov not worried about inflation
January 23, 2012 2:02 by Reuters
Oman may raise state expenditures this year if needed but the government does not plan to issue any sovereign bonds, Finance Minister Darwish al-Balushi said on Monday.
“If there is any need arising during the year, then of course we will (spend more),” he told reporters on the sidelines of an Islamic finance and banking conference.
“As far as a sovereign bond is concerned, we do not have any plan for tapping the market, whether it is Islamic or conventional,” he said.
Balushi said earlier this month the sultanate planned to boost budget spending by 26 percent to 54 billion rials ($140 billion) in its five-year plan, which ends in 2015, to create jobs and improve living standards in the Gulf Arab oil exporter.
In November, the consultative Shura Council approved the 2012 budget draft, estimating expenditures of 10 billion rials and revenue of 8.8 billion. State news agency ONA said earlier this month that Sultan Qaboos had signed the budget.
Sultan Qaboos bin Said, a U.S. ally who has ruled Oman for 40 years, promised last year to create 50,000 new jobs to defuse social tensions after public protests over jobs and corruption last year.
In September, Balushi told Reuters that government spending should rise to 9.2 billion rials in 2011 from the initially planned 8.1 billion following the social measures.
Oman, whose debt to GDP is forecast by the IMF to be the lowest in the Gulf at 3.2 percent this year, has only issued small amounts of development bonds in the past.
Balushi also said that inflation was forecast to reach 4 percent this year, reiterating recent central bank comments, and that further worsening of tensions around Iran’s nuclear programme could have severe impacts on the region’s financial system and economy.
In the United Arab Emirates, inflation was not a concern, the OPEC member’s central bank governor Sultan Nasser al-Suweidi told Reuters at the same event.
“There are no reasons to worry about inflation at this point in time because the sources of inflation are under control,” he said. “As long as the real estate sector is under pressure, it (inflation) is not likely to go up, hovering around 2 percent in 2012.”
UAE inflation remained at 0.9 percent on average in 2011, unchanged from the previous year and well below analysts’ forecasts, with the rate being the lowest since the Gulf War started in 1990.
Analysts polled by Reuters in December expected inflation in the UAE and Oman to reach 2.4 percent and 3.6 percent in 2012, respectively. ($1 = 0.3850 Omani rials) (Reporting by Martina Fuchs; Writing by Martin Dokoupil) *image from oneoman.com