Oman - Economic development

Oman's economic policy operates under five-year development plans. Oman's second five-year plan (1981–85) suffered to some extent from the impact of declining oil prices in the early 1980s. The objectives of the third development plan (1986–90) were to encourage the private sector to play a larger role in the economy and to expand such areas as agriculture, fishing, manufacturing, and mining. The fourth five-year development plan (1991–1995), aimed to achieve average annual GDP growth rates of just over 6% and the diversification of the sources of national income in order to reduce the dependence on the oil sector. The declared aim of the fifth five-year plan (1996–2000) was to achieve a balanced budget. The fall in oil prices to near-record lows in 1998 subverted the goal of a zero budget deficit in 2000, but rising oil prices in 2000 allowed the government to cut the deficit to only1.5% of GDP ($301 million) in 2000. Oman's sixth five-year development plan (2001–2005) aims at lessening dependence on government spending and employment, and at making the private the engine of growth for the economy. The government's long-run development strategy is the Sultan's "Oman Vision 2020," which is designed to see the economy through the depletion of oil reserves. The emphases are on processes of "Omanization," industrialization, and privatization. One of the most successful diversification projects has been the Salalah Container Port opened in November 1998. In 2000, it handled over 500,000 FEUs (forty-foot equivalency unit) and ranked among the top ten container ports in efficiency. A new industrial port is also being built at Sohar, to be operational in 2003. In terms of developing its natural gas potential, the government took a major step n October 2000 with the inauguration of the $2.64 billion liquefied natural gas project in Sur. Other gas development projects include plans for urea fertilizer plant in Sur, an aluminum smelter in Sohar, and petrochemical plant at Salalah. An emphasis on income diversification has opened the country to foreign participation in the form of joint ventures.