Implications of Oman's budget estimates for 2009
Last week, the Financial Affairs and Energy Resources Council reviewed the state budget estimates for the coming year, which will be unveiled at the beginning of January 2009.
Government ministries will have been working for months on their own budget estimates before figures were presented to this meeting.
On the day that the article was published, the price of Oman 1M oil was trading at around $65 a barrel. Today, the price stands at just over $58 a barrel, up by $4 a barrel from the previous day's closure.
In the face of an obvious global financial downturn, the Council nevertheless chose to set the state budget "on the assumption that oil will be priced at $55 per barrel."
This budget estimate was still more generous than that for the 2008 budget which was set at £45 a barrel. Considerable detail on budgetary figures and expenditure for 2008 is included in that article.
In January this year, a report from Moody's Investors was quoted by Emirates 24/7 as saying that GCC countries, of which Oman is one, could find it hard to curb expenditure growth in the face of rising inflation. For example, Oman hiked the salaries of government employees by 15% in 2007 as inflation began to bite.
Oman's inflation rate has risen by double figures every month this year. Inflation slowed from 14% in June to 13.7% in July but remained unchanged in August.
Perhaps the quoted figure of $55 reflects what is needed to maintain required levels of government spending as well as to sustain the development plans announced at the beginning of the year.
Nevertheless, a breakeven price of $76 a barrel has been quoted for Oman, bearing in mind that economists do differ substantially over actual figures.
Will there be retrenchment, or a standing-still?
"Oman’s actual budget surplus peaked at an all-time high of RO1.567 billion in the first eight months of 2008 compared with a surplus of RO652.4m in the same period of 2007" according to the Times of Oman on 23rd October. With luck, the State Reserve Fund will be able to step in and cover any deficit, should that be required.
I noted this paragraph in the January story, quoting Ahmed bin Abdulnabi Macki, minister of national economy and deputy chairman of the Financial Affairs and Energy Resources Council:
Government ministries will have been working for months on their own budget estimates before figures were presented to this meeting.
On the day that the article was published, the price of Oman 1M oil was trading at around $65 a barrel. Today, the price stands at just over $58 a barrel, up by $4 a barrel from the previous day's closure.
In the face of an obvious global financial downturn, the Council nevertheless chose to set the state budget "on the assumption that oil will be priced at $55 per barrel."
This budget estimate was still more generous than that for the 2008 budget which was set at £45 a barrel. Considerable detail on budgetary figures and expenditure for 2008 is included in that article.
In January this year, a report from Moody's Investors was quoted by Emirates 24/7 as saying that GCC countries, of which Oman is one, could find it hard to curb expenditure growth in the face of rising inflation. For example, Oman hiked the salaries of government employees by 15% in 2007 as inflation began to bite.
Oman's inflation rate has risen by double figures every month this year. Inflation slowed from 14% in June to 13.7% in July but remained unchanged in August.
Perhaps the quoted figure of $55 reflects what is needed to maintain required levels of government spending as well as to sustain the development plans announced at the beginning of the year.
Nevertheless, a breakeven price of $76 a barrel has been quoted for Oman, bearing in mind that economists do differ substantially over actual figures.
Will there be retrenchment, or a standing-still?
"Oman’s actual budget surplus peaked at an all-time high of RO1.567 billion in the first eight months of 2008 compared with a surplus of RO652.4m in the same period of 2007" according to the Times of Oman on 23rd October. With luck, the State Reserve Fund will be able to step in and cover any deficit, should that be required.
I noted this paragraph in the January story, quoting Ahmed bin Abdulnabi Macki, minister of national economy and deputy chairman of the Financial Affairs and Energy Resources Council:
With regard to the tourism sector, upon which the Sultanate very much counts, in view of its several potentials, the preliminary data for 2007 indicate that the sector is expected to grow by a rate exceeding 8 per cent. This is due to the increase in the accommodation capacities and the efforts exerted to promote the tourism in the Sultanate.I wonder what Mr Macki's take is on the cancelled Christmas holidays for the disappointed 'very much counted' Christmas tourists.
British tourists up in arms over Christmas holiday let-down in Oman
That's pretty much how London's Daily Telegraph has described the directive of the Diwan of the Royal Court to the management of the Bar al-Jissah resort, that it should be made available to the Gulf Cooperation Council (GCC) heads of state and their delegations for the whole of Christmas week.
Not just one, but two articles on this dreadful denial of rights (I'm being wry/facetious) to the affluent tourists who had booked their holiday in Oman's winter sunshine for this period. Sultan ruins Christmas in Oman, and Oman holiday plans wrecked by Sultan.
I wrote about this a few days ago, explaining the probable rationale behind the move.
It's a pity that the newspaper didn't actually even attempt to work out the realpolitik behind Oman's decision. The GCC summit is traditionally held in the last quarter of the year. As Blue Chi pointed out in his comment on the Telegraph's article, it's a big deal in the Gulf region.
Oman should have hosted the summit last year (2007), but the venue was changed to Qatar because the Al Bustan Palace Hotel, built originally to accommodate the first time Oman had hosted the summit in 1985, was seriously damaged during Cyclone Gonu in June 2007. I don't know if it did re-open, but it's been closed again for major refurbishment, probably in preparation for this year's summit. Has project management goofed? Were specifications for the refurbishment changed, which delayed the opening time?
Whatever the story, Oman HAD to host this year's summit. The Bar al-Jissah resort was the next most suitable venue. It has its own road. I assume it can be reasonably secured. It is, I understand, luxurious. It can accommodate lots of people.
And perhaps it would be appropriate to remind outraged British tourists that the GCC countries are Moslem. Not only that, but King Abdullah of Saudi Arabia, the most prominent member of the AGCC, is Custodian of the Two Holy Mosques. In the strict interpretation of Islam, there is no such thing as Christmas.
The major Moslem holiday, Eid al-Adha, and the preceding Hajj, the pilgrimage to Mecca, which is one of the pillars of Islam, falls in the period from late November right through to the third week of December. There is more religiosity in the Gulf than there is in Britain, where Christmas is more of a commercial, rather than a religious, festival.
The summit could not take place until the Eid was over. Although one wonders if there is a hint of malice in the GCC leaders collectively deciding to time the event for that particular week, as if to punish Oman for its unpreparedness.
Western tourists can complain all they like about their losses, but they aren't currently the bigger picture as seen from the point of view of Gulf leaders. Frankly, I find the Telegraph's reaction embarrassingly parochial, even if it is true that tourists would be dissuaded from booking holidays in Oman for the Christmas period in the future. Oman only hosts the GCC summit every six years, so they should be safe for a while.
By the way, a statement by an unnamed official at Oman's Ministry of Foreign Affairs said that, "the GCC summit will not host any party from outside the AGCC member states," that is, no-one will be coming from Iran.
Not just one, but two articles on this dreadful denial of rights (I'm being wry/facetious) to the affluent tourists who had booked their holiday in Oman's winter sunshine for this period. Sultan ruins Christmas in Oman, and Oman holiday plans wrecked by Sultan.
I wrote about this a few days ago, explaining the probable rationale behind the move.
It's a pity that the newspaper didn't actually even attempt to work out the realpolitik behind Oman's decision. The GCC summit is traditionally held in the last quarter of the year. As Blue Chi pointed out in his comment on the Telegraph's article, it's a big deal in the Gulf region.
Oman should have hosted the summit last year (2007), but the venue was changed to Qatar because the Al Bustan Palace Hotel, built originally to accommodate the first time Oman had hosted the summit in 1985, was seriously damaged during Cyclone Gonu in June 2007. I don't know if it did re-open, but it's been closed again for major refurbishment, probably in preparation for this year's summit. Has project management goofed? Were specifications for the refurbishment changed, which delayed the opening time?
Whatever the story, Oman HAD to host this year's summit. The Bar al-Jissah resort was the next most suitable venue. It has its own road. I assume it can be reasonably secured. It is, I understand, luxurious. It can accommodate lots of people.
And perhaps it would be appropriate to remind outraged British tourists that the GCC countries are Moslem. Not only that, but King Abdullah of Saudi Arabia, the most prominent member of the AGCC, is Custodian of the Two Holy Mosques. In the strict interpretation of Islam, there is no such thing as Christmas.
The major Moslem holiday, Eid al-Adha, and the preceding Hajj, the pilgrimage to Mecca, which is one of the pillars of Islam, falls in the period from late November right through to the third week of December. There is more religiosity in the Gulf than there is in Britain, where Christmas is more of a commercial, rather than a religious, festival.
The summit could not take place until the Eid was over. Although one wonders if there is a hint of malice in the GCC leaders collectively deciding to time the event for that particular week, as if to punish Oman for its unpreparedness.
Western tourists can complain all they like about their losses, but they aren't currently the bigger picture as seen from the point of view of Gulf leaders. Frankly, I find the Telegraph's reaction embarrassingly parochial, even if it is true that tourists would be dissuaded from booking holidays in Oman for the Christmas period in the future. Oman only hosts the GCC summit every six years, so they should be safe for a while.
By the way, a statement by an unnamed official at Oman's Ministry of Foreign Affairs said that, "the GCC summit will not host any party from outside the AGCC member states," that is, no-one will be coming from Iran.
No Christmas for the AGCC summit
If you had been hoping to spend Christmas and the New Year basking in the sun at the Bar al-Jissah resort and spa, you are likely to be disappointed.
According to a private message I have received, ALL the facilities at both the Al Bandar and Al Husn hotels at the Bar Al-Jissah resort are to be placed totally at the disposal of the Diwan of the Royal Court from 24th-30th December 2008 (inclusive), "to facilitate the requirements of the delegates attending the GCC Summit."
The message coincides with the assertion by secretary-general of the AGCC Abdul Rahman bin Hamad Al Attiyah, printed in the Times of Oman yesterday that:
The Times of Oman report added that because the proposed dates for the AGCC summit fell in late November and coincided with the pilgrimage season of the Hajj, the meeting had been postponed.
Eid al-Adha is scheduled to start on 8th December, following the Hajj. Traditionally, it is a long holiday, particularly in Saudi Arabia.
In the past, Oman has hosted the AGCC summit at the Al Bustan Palace Intercontinental Hotel, but the Al Bustan is closed for refurbishment. So the organisers have gone for the next exclusive venue - the Shangri-la Resort.
I received my news from someone who had been planning a lavish, relaxing Christmas there. It will not happen. There will be no Christmas at Shangri-La.
He speculated that the action of closing the hotels would be extremely detrimental to the opinion of high net-worth tourists on Oman as a tourist destination, particularly as Christmas and New Year are the peak period for winter holidays in western countries. Otherwise you go skiing from January to March.
But I suspect that the feelings of expatriate tourists are not the focus of the AGCC summit organisers. Tourists with money can always go somewhere else.
Within the AGCC community, it is fraternity and brotherhood with fellow Arabs that counts - and Saudi Arabia is a big neighbour where Christmas is not recognised.
On another note, the Khaleej Times reported yesterday (21st October 2008) that 11,000 residents on the Batinah coast will be moved to make way for a 240 km coastal road and possibly also a railway.
The displaced citizens will be rehoused in "2,200 houses to be built at a cost of RO148 million under an agreement signed by the government here on 19th October with Al Rajhi Development Company (ARDC) in Barka, Musanah, Liwa and Shinas."
The plan was also announced in Sunday's Times of Oman, but with a different emphasis.
According to a private message I have received, ALL the facilities at both the Al Bandar and Al Husn hotels at the Bar Al-Jissah resort are to be placed totally at the disposal of the Diwan of the Royal Court from 24th-30th December 2008 (inclusive), "to facilitate the requirements of the delegates attending the GCC Summit."
The message coincides with the assertion by secretary-general of the AGCC Abdul Rahman bin Hamad Al Attiyah, printed in the Times of Oman yesterday that:
“No new dates [for the AGCC summit] have yet been set as it is a procedural issue and it’s still under consultation.”A Saudi newspaper suggested that the most likely dates for the conference would be 29th-30th December.
The Times of Oman report added that because the proposed dates for the AGCC summit fell in late November and coincided with the pilgrimage season of the Hajj, the meeting had been postponed.
Eid al-Adha is scheduled to start on 8th December, following the Hajj. Traditionally, it is a long holiday, particularly in Saudi Arabia.
In the past, Oman has hosted the AGCC summit at the Al Bustan Palace Intercontinental Hotel, but the Al Bustan is closed for refurbishment. So the organisers have gone for the next exclusive venue - the Shangri-la Resort.
I received my news from someone who had been planning a lavish, relaxing Christmas there. It will not happen. There will be no Christmas at Shangri-La.
He speculated that the action of closing the hotels would be extremely detrimental to the opinion of high net-worth tourists on Oman as a tourist destination, particularly as Christmas and New Year are the peak period for winter holidays in western countries. Otherwise you go skiing from January to March.
But I suspect that the feelings of expatriate tourists are not the focus of the AGCC summit organisers. Tourists with money can always go somewhere else.
Within the AGCC community, it is fraternity and brotherhood with fellow Arabs that counts - and Saudi Arabia is a big neighbour where Christmas is not recognised.
On another note, the Khaleej Times reported yesterday (21st October 2008) that 11,000 residents on the Batinah coast will be moved to make way for a 240 km coastal road and possibly also a railway.
The displaced citizens will be rehoused in "2,200 houses to be built at a cost of RO148 million under an agreement signed by the government here on 19th October with Al Rajhi Development Company (ARDC) in Barka, Musanah, Liwa and Shinas."
The plan was also announced in Sunday's Times of Oman, but with a different emphasis.
A vote of no confidence? Healthcare City at Al Sawadi abandoned
In a brief note yesterday, Ameinfo announced that The Kuwait-based Gulf Investment House has withdrawn from financing the Majan Development Company's bid to build a one billion dollar (RO400 million) healthcare city adjacent to the Blue City development.
Who, or what, is the Majan Development Company? The Khaleej Times helpfully obliges:
The head of the bank's investment group said that they had carried out "a feasibility study [ ] which yielded positive results with regard to the Omani real estate market."
The healthcare city venture was announced only in March 2008. Bashar Nasser Al Tiwaijri (also spelt Tuwajiri), Senior Manager, Direct Investment, GIH, said at a news conference that
Nonetheless, Ameinfo quoted MEED yesterday as saying that GIH had abandoned its plans for the healthcare city. No reason was given.
No connection with Blue City has ever been declared, and the current turmoil in financial markets means that funds for investment are much harder to come by, if not funds on an individual basis with which to buy property, but one wonders...
Who, or what, is the Majan Development Company? The Khaleej Times helpfully obliges:
Majan Development Company, MDC, with an authorised capital of RO40 million and paid up capital of RO25 million, has been founded by a group of investors in the region with Kuwait-based Gulf Investment House (GIH) holding a 50 per cent stake.Inspired by the potential returns on real estate investment in Oman, the Sharjah Islamic Bank declared in May this year that it had taken a ten percent stake in the company, putting the value of MDC at over $100 million ($1 billion).
The other partners are the Pension Fund of Oman's Ministry of Defence, Sharjah Islamic Bank and Real Estate Trading Company (10 per cent each), Public Authority for Social Insurance (nine per cent) Oman-UAE Exchange Company (five per cent), Oman Cement Company (four per cent) and the Pension Fund of the Royal Guard of Oman (two per cent).
The head of the bank's investment group said that they had carried out "a feasibility study [ ] which yielded positive results with regard to the Omani real estate market."
The healthcare city venture was announced only in March 2008. Bashar Nasser Al Tiwaijri (also spelt Tuwajiri), Senior Manager, Direct Investment, GIH, said at a news conference that
the proposed healthcare city, to be built on an area of one million square metres in Al Sawadi allotted by the Ministry of Tourism, some 100kms from Muscat, would comprise medical colleges, hospitals, hotels, conference halls and shopping malls.GIH too had asked an international consultancy to carry out a feasibility study, which had been positive. The GIH stake in MDC is variously said to be 20 percent or 50 percent, depending on which news report you read.
Work on the first phase of the project, to be carried out on a build, operate and transfer (BOT) basis, will start by next year. At the end of the BOT period, it will be handed over to the government.
Nonetheless, Ameinfo quoted MEED yesterday as saying that GIH had abandoned its plans for the healthcare city. No reason was given.
No connection with Blue City has ever been declared, and the current turmoil in financial markets means that funds for investment are much harder to come by, if not funds on an individual basis with which to buy property, but one wonders...
Three videos of Oman
These three videos date back to January 2004, when I visited Muscat. It's taken me this long to download the video from the camcorder and to edit it. I apologise for the poor quality. I aim to improve!
I went to the Muscat Festival at Al Khuwair one rainy January evening, after storms had been raging over the mountains. There weren't so many people there as a result.
I suspect that nationals would flinch at my emphasis on traditional crafts and dancing, but as a Western tourist, it's the kind of thing that I'm interested in. More photos of the Muscat Festival...
I was able to tour the Sultan Qaboos Grand Mosque in Al Ghubrah, at the second time of trying, because I was considered to be 'undressed' when I went the first time. Not that it will make much impact on readers, but this kind of reaction from over-zealous doormen is a real affront to female tourists. I suspect that, as a lone female visiting, I was judged more harshly. Even one stray lock of hair led to admonishment.
However, the gardens and the birdsong were a delight. More photos of the Grand Mosque...
Finally, here is a glimpse of the Al Kasfah Spring at Rustaq. The constantly upwelling water has a temperature of around 46 degrees centigrade. Many people visit the spring to bathe in its waters which are believed to have therapeutic properties. Above the spring is a mosque. This is the start of a falaj system within this area of Rustaq. Water flows through the bath house into a bathing area for women, and is then used downstream progressively for washing clothes, domestic use and finally for irrigating agriculture. Photos of Nakhl and Rustaq...
I went to the Muscat Festival at Al Khuwair one rainy January evening, after storms had been raging over the mountains. There weren't so many people there as a result.
I suspect that nationals would flinch at my emphasis on traditional crafts and dancing, but as a Western tourist, it's the kind of thing that I'm interested in. More photos of the Muscat Festival...
I was able to tour the Sultan Qaboos Grand Mosque in Al Ghubrah, at the second time of trying, because I was considered to be 'undressed' when I went the first time. Not that it will make much impact on readers, but this kind of reaction from over-zealous doormen is a real affront to female tourists. I suspect that, as a lone female visiting, I was judged more harshly. Even one stray lock of hair led to admonishment.
However, the gardens and the birdsong were a delight. More photos of the Grand Mosque...
Finally, here is a glimpse of the Al Kasfah Spring at Rustaq. The constantly upwelling water has a temperature of around 46 degrees centigrade. Many people visit the spring to bathe in its waters which are believed to have therapeutic properties. Above the spring is a mosque. This is the start of a falaj system within this area of Rustaq. Water flows through the bath house into a bathing area for women, and is then used downstream progressively for washing clothes, domestic use and finally for irrigating agriculture. Photos of Nakhl and Rustaq...