MUSCAT: The rate of growth of Oman’s crude oil production slowed down marginally to 6.4 per cent at 315.6 million barrels in 2010, from 7.1 per cent in the previous year.
The aggregate production of natural gas was up 7.2 per cent to 1176.8 billion cubic feet (BCF) in 2010 compared with 1097.7 bcf in 2009, the Central Bank of Oman (CBO) has revealed.
In volume terms, crude oil exports rose by 12.1 per cent to 268.7 million barrels in 2010 compared to 10.6 per cent rise in the previous year, primarily driven by rising global demand, mostly from the emerging economies, it said in the annual report released yesterday.
Omani crude oil fetched an average price of $76.6 per barrel in 2010, which was 35.1 per cent higher than $56.7 per barrel in 2009.
Government finance
CBO’s annual report also said that the Sultanate’s overall fiscal balance improved significantly in 2010 mainly due to buoyancy in revenues arising out of rise in crude oil prices in the international markets.
“Total revenues increased by 17.3 per cent to RO7,916.5 million in 2010 from RO6,748.4 million in 2009. Net oil revenues increased by 21.8 per cent to RO5,470.1 million and its share in total revenues moved up from 66.5 per cent in 2009 to 69.1 per cent in 2010,” noted the report.
Total expenditure increased by 7.2 per cent to RO7,965.3 million in 2010 from RO7,428.7 million in 2009. The overall fiscal deficit, after transfer of surplus revenues to several sovereign funds, stood much lower at RO48.8 million in 2010 compared to RO680.3 million in the previous year.
Budget deficit
Oman’s annual budget for 2011, presented in the beginning of the year in the backdrop of a fragile global recovery and rising international commodity prices, assumed a higher average Omani crude oil price of $58 per barrel and a higher daily average crude oil production of 896,000 barrels.
“Based on the conservative assumption of Omani crude oil prices, the overall fiscal deficit was originally budgeted at RO850 million in 2011, which is expected to be financed primarily by drawing from reserves,” said the report.
In April 2011, the government introduced a supplementary expenditure of RO1 billion over the 2011 approved budget, primarily for pay increases, benefits and additional wages for newly hired public servants. As a result, the overall fiscal deficit may be higher at RO1.85 billion in 2011.
Money supply
Reflecting recovery of the economy, broad money (M2) increased by 11.3 per cent in 2010 compared to a rise of 4.7 per cent in the previous year. “Aggregate deposits with the commercial banks, which grew by 14.7 per cent in 2010, were sufficient to support the 9 per cent rise in total credit. Liquidity condition remained comfortable throughout the year as evident from large roll over of the CBO certificates of deposit in the weekly auctions.”
Reflecting easy liquidity conditions, both deposit and lending rates in Oman softened during the year. The inter-bank call money rate was marginally higher than the CBO certificate of deposit (CD) rate during the year and remained within the informal corridor set by the CBO certificates of deposits rate and the repo rate.
Banking system
Oman’s banking system continued to perform well during 2010 consistent with recovery of the real economy. The BIS capital adequacy ratio of commercial banks averaged 15.8 per cent at the end of 2010 which exceeded the mandated 12 per cent.
Commercial banks earned a higher profit of RO247.7 million in 2010 compared to RO190.8 million in 2009. Net of reserve interest, gross non-performing loans (NPLs) of banks as a ratio of total credit stood lower at 2.9 per cent at the end of 2010 compared to 3.4 per cent a year ago.
Balance of payments
Oman’s balance of payments position improved significantly in 2010 mainly due to rise in crude oil prices in the international markets. Total merchandise exports increased by 32.4 per cent to RO14.1 billion in 2010, in contrast to a decline of 26.7 per cent to RO10.6 billion in the previous year.
As increase in imports was relatively modest at 11.4 per cent in 2010, the merchandise trade balance improved to a surplus of RO7.2 billion during the year compared to RO4.5 billion in 2009.
After accounting for a combined outflow of RO5.2 billion on account of services, income and transfers, the current account registered a surplus of RO1.96 billion in 2010 as against a deficit of RO230 million in the previous year.
Net inflows on account of foreign direct investment and portfolio investment were RO747 million and RO366 million, respectively in 2010, which were significantly higher to the previous year.
On a balance of payments basis, there was an increase in foreign exchange assets to the tune of RO574 million in 2010, comprising RO339 million in the CBO’s account and RO235 million in the government’s account.
At the end of 2010, CBO’s gross foreign assets (including valuation) stood at RO5,008.5 million, which was sufficient for more than eight months of merchandise imports.
