DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENTINTERNATIONAL DEVELOPMENT ASSOCIATION

Not For Public Use

Report No. EMA-55a

OF

OMAN

September 12, 1972

Europe, Middle East andNorth Africa Department

IThis report was prepared for official use only by the Bank Group. It may not be published, quoted |or cited without Bank Group authorization. The Bank Group does not accept responsibility for theaccuracy or completeness of the report.

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CURRENCY UNIT: Rial Saidi (RS)

(1000 baiza = 1 RS)

Before August 15, 1971

RS 1 = US $2.40

US $1 = RS o.417

Currently

RS 1 = US $2.60

US 4 = RS 0.385

This report is based on the findings of an economic mission whichvisited Oman during March and April 1972. The mission consisted of the fol-lowing:

Harold Larsen ChiefJoseph Korosec General EconomistConstantine Giatrakos National AccountsAndreas Papasolomontos (FAO) AgricultureClifford Hardy TransportTillman Neuner TransportBurton Newbry EducationSheikh Noor EducationTrevor DaCosta Project Officer

The report also drew upon the findings of Mr. Gavin E. Wyatt(Electric Power), who visited Oman in December 1971.

TABLE OF CONTENTS

Page No.

BASIC DATA

MAP

SUMMARY AND CONCLUSIONS .......... .................... i - xi

I. TIIE SETTING ......................................... 1

Natural Resources . ................................. 1Population ........................ .. .......... 2Political Background . ................................ 3

II. RECENT ECONOMIC PERFORMANCE .......................... 5

Growth of Output ..................... 5Use of Resources ....................... 6Internal Finance ..................... 7External Sector ...................................... 10Government Administration ............. ............... 13

III. PRINCIPAL ECONOMIC SECTORS ....... .................... 14

Oil ............................................ 14Agriculture .......................................... 17Transport ............................................ 24Power ............................................ 31Education ............................................ 33Health .................. ...... 36Domestic Water Supply ................................. 36

IV. DEVELOPMENT STRATEGY AND PROSPECTS ..... .............. 38

ANNEX - NATIONAL ACCOUNTS .......................... 1 - 9

STATISTICAL APPENDIX

Page 1 of 2 pages

COUNTRY DATA - OMAN

AREA POPULATION DENSITY260,OO0 km2 0.6 million (mid-1971) 2 per km' 2

Rate of Growth: 3% (from 1966 to 1971) ibid: 600 per km of arable land

POPULATION CHARACTERISTICS HEALTH 1971Crude Birth Rate (per I.0 0* Poplnulatin nor n _hv_i_i_n 14,600Crude Death Rate (per 1,000) Population per hospital bed 1,800Infant Mortality (per 1,000 live births)

INCOME DISTRIBUTION DISTRIBUTION OF LAIND OWNERSHIP 1971s of national income, lowest quintile % owned by top 10Q of owners

highest quinti'll .. % owned by smallest iO% of owrf rners

.CCESS TO PIPED WATER ACCESS TO ELECTRICITY 19717 of population - urban .. % of population - urban 60(Q

-rural .. -rural 10%

NUiTRITION EDUCATION 1972Cslorie intake as % of requirements .. Adult literacy rate % Per capita protein intake Primary school enrollment % 15Z

ONP PER C-APITA IN 1071: TTU $444/

rCOSS NATIONAL P.'-lOD'CT IN 1071 ANEINJAL RATE OF GRuwTH (%, cons--

US $ Mln.!/ % 1960-65 1965-70 1971

GNP at Market Prices 266 100.0Gross Domestic Investment 92 34.6Gross National Saving 1i45 54.5Current Account Balance 35 13.2Exports of Goods, NFS 239 89.8Imports of Goods, NFS 106 39.8

OUTPUT, LABOR FORCE ANDPRODUCTIVITY IN 1971

Value Addedi/ Labor Force?! V. A. Per WorkerUS $ Mln. % Mln. % US $ %

Agriculture -Fisheries 40 12 124 83 32' 14Oil 225 65 3 2 75,000 3,275Services 2 1 5 3Unallocated 77 22 18 12 ) 3,434 150

Total/Average 3W 100 150 100 2,90 100

GOVERNMENT FINANCE

General Governrment_/ Central Governmentl/3/US S Mln. % of caP US MI"n. of GDP1971 1971 1969-71 1971 1971 1969-71

Current Receint. . . . 120 35 '1Current Expenditure . . . 63 18 21Current Surplus . . . 57 17 19Capital Expenditures . . .49 14 17External Assistance (net) . . . 2 1 1

not availablenot applicable

Page 2 of 2 pages

COUNTRY DATA - OMAN

MONEY, CREDIT AND PRICES 1965 1969 1970 1971(million RS outstanding end periodj

Money and Quasi Money .. 29 35 46Bank Credit to Public Sector 0 0 0

Dank Credit to Private Sector ,= 2.3 3.7 4.3

(Percentages or Index Numbers)&/

Monev and Quasi Money as % of GDP .. 31 31 32

General Price Index (1963 = 100) ..

Annual percentage changes in: ..

General Price IndexBRank credit to Public Sector:Bank credit to Private Sector .. 100 150 167

bWLANCE OF PAYMENTS MERCHANDISE EXPORTS (AVEHAGE 1969-71)

1969 1970 1971 US $ Mln %

(MillTions US $ 17:.:;o-ts of Goods, NFS, net 103 119 132 oil, net 116 99

Tmports of Goods, NFS 21 37 83 All other commodities 1 1

.,source Gap (deficit = -) - 7 Total 117 10

Tr.r,erest Payments (net) - - -iorkers' Remittances 1 1 1

Other !`actor Payments (net)- - - 15 EXTERIAL DEBT, DEC-M'BER 31, 1971

Net Transfers - - -

Balance on Curent Account 80 79 US $ MIn

Direct Foreign Investment - - - Public Debt, incl. guaranteed 2

Net MILT Borrowine - - 2 Non-Guaranteed Private DebtDishursements ( - ) ( - ) ( 2 ) Total outstanding & Disbursed 2

Amortization ( -) ( -) ( -

SubtotalCaGital Grants - - - DEBT SERVICTE !ATIO FOR 1971

Other Capital (net) - - -,therie n.e.i - - -Lncrease in Reserves (i) fi 79 32

Public Debt, incl. guaranteed 0

Gross Reserves (end year) 120 198 234 NonG-uaranteed Private Debt

Net Reserves (end year) 118 196 228 Total outstanding & Disbursed 0

PATE OF EXCGIPAGE§ IBRD/IDA LENDING

Through - 1971 IBiiD IDA

US ioo = RS 0.1417RS 1.00 = US$e2.o Outstanding & Disbursed 0 0

Undisbursed 0 0

Since - 1971 Outstanding incl. Undisbursed 0 0

RS 1.00 = US32.60

I/ At, Excoange Rate RS 1 = US $2.40E/ Estimates of active population

3/ Central goiernment's revenues and expenditures equal all Govermnent's Revenues and Expenditures

T/ Till Aoril 1972 there was no statistical service, nor recording of prices

-/ Does not include estimates on factor payments from the Oil sector

o/ Exchan.ge rate before December 20, 1971 was RS 1 US $2.L0 (US 41 = RS O.L17)

not availablernot applicable

August 15, 1972

EUROPE, MIDDLE EAST ANDNORTH AFRICA DEPARTMENT

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BALANl ACEflf DAYMA'NTS ANflD F!SCA! TrENDS, 1097 - 1072DMLF .IL I..'..r U~IfII LIM J~ I I0 *1S * * ~- .I -~, * -

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1967 i968 1969 1970 -1971 1972

VVorld Bank-6896(R)

SUMMARY AND CONCLUSIONS

1. The Sultanate of Oman (formerly Muscat and Oman) is mostly desertand part mountainous. In effect, Oman has islands of settlement separatedby desert. The Hajar mountains receive rainfall in the winter, a consider-able portion of which percolates underground, and so supplies interior Omanand the Batinah coast with water for irrigation and domestic use throughoutthe year. In Dhofar Province, precipitation is considerably higher, and themountains behind Salalah catch the summer Monsoon rains, with a number ofperennial springs reaching the coastal plain. The Gulf of Oman and theArabian Sea provide fish for human consumption or for conversion into fishmeal for animal feed and/or manure.

2. Little is known about mineral resources other than oil, althoughthe country was reportedly the site of ancient copper, silver and coal mines.The main oil fields are located in the Rub al Khali about 250 km west ofMuscat. Exploration is continuing in interior Oman, in Dhofar and in theGulf of Oman and the Arabian Sea. There is as yet no significant industryin Oman.

3. Estimates of total population vary from 450,000 to as high as 1million. The mission has selected 600,000 as most plausible on presentevidence. The Batinah Coast and some oases in the interior are the mostdenselv populated areas. Ponulation growth is usually said to be about 3%.Whatever today's growth rate may be, it will certainly increase in the future,since the snread of health services will lower death rates before birth ratesfall.

4. Besides employment in agriculture, which occupies perhaps 80 per-cent of theo nnp lationn mnyn fmanin nre enogaed in finherie8 (whith- like

shipbuilding, lost importance in the last two decades), or in such ruraltrades as potter , cotton weaving, dyeing and clonthing. S iluer and coppercraftsmen, as well as blacksmiths, Joiners and builders, can be found inm-ost villages. In the town.ms there are civil serants, merchants, construc-

tion workers and porters but recently also mechanics, electricians and taxidrivers.

5. Oman is an independernt Suitanate- The nh frtiupe And nattprn ofGovernment were transformed at the end of July 1970 when Sultan Said binTai.mur, whoapparentl-y believed social and economic change should bev

slow, was deposed by his son Qaboos bin Said. Sultan Qaboos has removedm ...A; . t -L - t 4 _ _ nA _ 1,4 . n 1 a 4 , a 1 e A

IlauLy VL LIkE LI D;.L%_LL.LS.JL -W -U Y U--- -- -..- ye M .- v _ .U.m C.

large number of Omanis have returned from abroad, some taking high positionisir LtIe oU11"L&.L FLstra-lon..

6. ~Guerill12a activities ir. the southern Province of Dhofar started in'J. 'UE I.L..LU U. LJ.V A. ~ AA.~0 tf fL.l CL .. Lft I. .L V.fL, LAfI.J a U L o .L U LU.

1963 as an active opposition movement against the old Sultan. This movementhas since grow-Li into a fuilcl=ledged guerilla action 1-ow.. as th Ppua*IsUOLL. IIWLIL ~A. L~ A..L U%0I UE L.LLUA. L. L KnoL cLLILo . Lthe r puJlarU

Front of the Liberation of the Occupied Arab Gulf (PFLOAG). Militaryoperatilons against tLe L -,.ovem.er.t are st ' 'ill a maJIor luraiLn on tiL'Ie S.ultULIanatLe's

resources.

Recent Economic Perfor-ance

7. Before oil exports cormimiienLceu in 1967, O-an's economi.y, mainly of

subsistence agriculture and fisheries, virtually stagnated. Per capita in-

come was probably declining at a level under $100 during the period 1960

through 1966. Despite growing oil revenues since 1967, little was spent

on development until mid-1970. Thereafter, Sultan Qaboos embarked uponsome large development projects, established government administration andincreased defense efforts against guerillas in Dhofar. Thanks largely to

oil exports, GNP per capita rose to over $400 in 1971. Over the ppriod 1967-:71, Government consumption rose at an annual rate of 100 percent iA current

prices, private consumption at 4 percent, gross domestic fixed capital forma-

tion at 32 percent and gross national savings at 34 percent. In 1971, gross

national savings were about 55 percent of GNP, well in excess of gross domes-

tic fixed capital formation (35 percent).

Internal Finance

8. Government revenues were small before 1967; the Sultanate's financeswere supported by British Government grants, at a level of about RS 1.5 mil-

lion per annum, which were terminated when oil exports began. During thefive years 1967-71, the Government's oil revenues totalled RS 158 million($380 million at then par value RS 1 = US$2.4). Over the same period, Gov-

ernment foreign assets increased to about RS 60 million ($145 million) atthe end of 1971; a substantial part of these can be regarded as accumulated

public savings.

9. Defense dominated public expenditures from 1967 through 1970, ac-

counting for 88 percent of current expenditure over this period. After July1970, spending attitudes changed. Defense was further increased, but withgreater emphasis on military capital expenditures. Development expenditure

became, however, the main single item in 1971, accounting for 44 percent of

total public expenditures. The new Government was able to increase develop-ment expenditure so quickly because the design of some big projects such as

a major port, an international airport and some principal roads had alreadybeen commissioned by the former Sultan. From 1967 through 1970 the publicsector showed heavy surpluses - in 1969 as much as 75 percent of revenues.In 1971 the surplus fell to 7 percent of revenues, while the budget for 1972foresees a large deficit, about 43 percent of fiscal revenues. This hasarisen mainly because of contractual commitments, both for public civil in-

vestment and for defense capital expenditures, entered into in 1970 and 1971,whose payments peak in 1972. Financial reserves are adequate to cover this

deficit but its emergence will have consequences for the domestic economy andlessor.s for the future,

10. The rapid growth of -ublic expenditures could not remain without

consequences on an economy ill-equipped to meet the sudden increase of demand.

Prices of foodstuffs and rents oared. Due to large -rire increases and the

shortage of labor, wages and salaries rose sharply. Lack of skilled, and to

a lesser extent of unskilled, labor induced an inflow. of expatriates. This

in turn affected the labor market, with discrepancies in salary levels betweenexpatriates and the 4ndi&enous population.

External Sector

ii. Before 1967 Oman had trade deficits which were partly covered byBritish financial support and partly by borrowing from merchants rather thanfrom banks. After 1967, substantial trade surpluses emerged and foreign ex-change holdings accumulated. On current account, balance of payments receiptsare now dominated by revenues from the oil sector, permitting a sharp rise ofimports, particularly in recent years. Concurrently there was a considerableincrease in transfers abroad, mainly income transfers by expatriates.

12. Exports of traditional agricultural items, dried limes, dates,tobacco and hides, have declined. Dried fish meal for fertilizers, whichwas an important export commodity some years ago, has declined due to com-petition from more efficient producers. Traditional exports are mostlydirected to the Gulf countries and to Iran, Iraq and India.

13. Foreign exchange reserves increased steadily after 1967. At theend of 1971, foreign reserves covered thirty-three months of imports, net ofoil sector imports, at the level of 1971. Oman at present has no foreign debtapart from a small suppliers' revolving credit totaling RS 1 million incurredby the Muscat Power Authority for equipment imported in 1971. Foreign aidhas been confined largely to technical assistance.

Government Administration

14. Until 1970, there were no government civil services, and all deci-sions regarding state affairs, including public investments and appropriationsfor current public expenditures were made by the Ruler who used the adviceand services of a few expatriates. The new Sultan established new ministriesand departments and appointed nationals, many of them returnees, to some tonpositions. There has so far been no comprehensive sector development plan-ning, let alone financial and macro-economic planning. The Government StrUC-ture is still undergoing changes.

Principal Economic Sectors

15. The oil sector constitutes the engine of growth for the Omani econ-omy, contributinr 95 percent of fiscal revenues and 98 nereent of total for-eign exchange earnings. Agriculture, with fisheries, is the second most im-portant productive sector, providing livelihood for some four-fifths of thepopulation. The transportation sector started to develop only recently withheavv investments in some maior nroerts4 Educa'tion and health services

also began developing over the last two years.

Oil

16. Oil in commercial quantities was discovered in February 1964, andreoular exporta of crude started in August 1967. The proven reservea arepresently estimated at over 2 billion barrels, or about 300 million tons,i.e , about twenty years' production. All crude is exported; OMani crudeis of good quality with a low sulphur content, and shipping distances areless than from terrminals in the Arabian Gulf.

- iv -

17. Oman is not a member of the Organization of Petroleum ExportingCountries (OPEC) but is, nevertheless, benefiting from the terms of theTehran and subsequent OPEC Agreements. The prospects for some increase of

oil revenues in the medium run are good; production from known findings (notall proven) may rise by 10-15 percent which, together with price adjustments,could increase oil revenues by some 25 percent in 1975 as compared with 1971.Longer term prospects are uncertain, being dependent on the discovery of new

fields, for which exploration is continuing.

Agriculture

18. Agriculture plays a significant role in the economy of the Sultanatenot only because of its contribution to gross domestic product and exports

(non-oil exports are entirely of an agricultural and fisheries origin), but

also by providing employment for the majority of its people.

19. Farming in Oman has been, and still is, partly of a subsir;tencenature with surpluses, if any, being marketed either for cash or on an ex-

change basis with neighboring farmers. Under these circumstances there islittle cron snecialization. Most farmers crop substantial parts of their

holdings to dates, limes, bananas, lucerne and tobacco together with sometrees of maneoaR guavas. mulberries, pomegranates, grapes, etc., as well

as vegetables. Generally, each farmer keeps a small number of goats and

sheep which, duiring the winter and spring months, are grazed on natural

pastures around the village and for the remainder of the year are stall ted

on lucerne, dates and fish meal. In Dhofar Province there is a significantcattle population, particularly in'the foothills of the Quara mountains.Poultry in small nnmhbers are also kent throughout Oman. Farm holdings are

typically small, worked by owners or tenants. About 66 percent of farmers

cultivate more than one farm!ngarden. There are no large-scale farming op-erations.

20. Irrigation is of the utmost importance. With the possible excep-tion of some rainfed rough p-asitureps ini t-hp winter and earlv spring months;

there is no rainfed agriculture in any part of the country. Agriculture and

agricultural proAuctvt r mr hrfr is, annd will continue to be j

completely dependent on the availability of water for irrigation. There.ls thus a needl fLor soil'A anAd water surveys ir. the importar.tarcluaregions. On-the-farm water distribution and irrigation is traditional andwastefLu'l. N14o th'orougih studies of the_ wrat-er requiret.e-ts of the .M.4--crp

in the various regions have yet been carried out. Over irrigation is notonly wasteful of water, a precLous co.mmodity per se, but also leads to

leaching of nutrients from the root-zones and to various diseases of theroot systems of most crops. Furthermore, excessive water pu..ping i.cresesthe cost of production considerably.

21. Oman has considerable potential for increasing agricultural pro-duction. Early increases in the product'i-vity of existing crops could be

achieved through the increased use of inputs such as fertilizers, pesti-cides and true-to-type certified and disease-free seeus. A well conducteU

applied research program, in conjunction with an improved extension service,

wou'Ld assure considerabie increases in productivity a few years after itscommencement. In the longer run, increases in production could be expectedfrom new lands, particularly on the Batinah coast and potentially in Dnofar,which could be put under cultivation, depending on water availability. Theextent of new land and of these water resources will not become known withany degree of certainty until proper surveys have been carried out.

22. Oman is likely to face increasing difficulties in the export ofits traditional export crops such as dried limes and dried dates, partic-ularly with the relative quick output growth that can be expected throughincreasing use of inputs. Diversification of agricultural production,processing and the finding of new markets will therefore become increasir.glyimportant in the years ahead. A basic aim of agricultural policy should notonly be to increase production of traditional crops but also to diversifyproduction by encouraging new crops found suitable for the agroclimatic con-ditions of the country and competitive in both the local and export markets.Significant export possibilities exist in the nearby markets of the Union ofArab Emirates, where Oman, because of its proximity and agroclimatic condi-tions, could be in a good position to compete. In addition, packing andprocessing plants would offer the possibility of exporting to wider markets.Livestock, particularly in Dhofar, would appear to offer good long-rangeexport potential, after the cessation of hotilities there.

23. In view of the limitations in the infrastructure of the supportingservices, the lack of information on the physical resources of the country,the non-availability of local expertise and the absence of reliable data oncurrent crop acreages, production, etc., the desirability and possibilityof technical and advisory assistance to Oman, perhaps by a small team inter-national in character, to assist the Government with the formulation ofagricultural institutions and policies should be considered. Such assistanceshould pay particular attention to the economic and social role which agri-culture should play in Oman's development and to the needs for agriculturalresearch, extension and education, agricultural credit requirements, market-ing and processing (possibly on the basis of cooperatives), as well as to theoptimum development of the land and water resources of the country. The teamshould also be equipped to look into the possibilities of setting up seedand seedling production facilities and to evaluate the possible role of co-operatives, or other suitable organizations, in the future supply of agri-cultural inputs, particularly fertilizers and pesticides.

Transport

24. The traditional economy placed little demand on the transport sys-tem. The bulk of marketed products had to move only short distances, perhaps20 kilometers, which was within the range of conventional donkey and cameltransport. A few products were carried over longer distances; the flowis still small but likely to increase with economic expansion. Transport bydhow is common alonR the coast but no records are available. The transportrequirements of the oil sector are largely self-contained within the opera-tions of Petroleum Development (Oman) Limited (PD(O), the concessionaire.PD(O) operates its own port for imports of equipment and exports of oil,construnts and maintainA its nun accesR roada to the oil fields. contracts

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for its' own internal air services and uses its own pipeline to evacuate thecrude oil from wells to port.

25. Because of Oman's dry climate, sparse vegetation and high strengthof the subsoils, it is possible to drive across country except in the moun-tainous regions, and it is estimated that more than 90 percent of the villagescan be reached with four-wheel drive vehicles. In general, therefore, theconstruction and maintenance of roads is not needed to provide access tomotorized transport, but more to reduce its costs and to improve service.In mid-1970 there were only about 1,000 motor vehicles of various kinds inOman, mostly belonging to the armed forces or to PD(O). As of the end ofMlarch 1972 the total number of vehicles registered had risen to over 6,800.

26. The organization for planning. constructing and maintaining roadsis in an initial stage of evolution. Originally, most of the design of roadnroniects was done by contractors on a package deal basis (design and construct).The tendency has been to overdesign, and not to use available local materialsto thp extent nossible. Labor. both unskilled and skilled, is scarce; oneconsequence is that most civil works are executed by equipment-intensivemef--nhod- A re_rntlv crrated Directorate of Roads is nresentlv oecupied

solely in maintenance of the highway system-

27. The present scarcity of information on the condition of Oman's roadsystem and on the traffir us-ing it- make it diffirult to assess longer-rangepriorities for mtajor improvements or even to devise a rational maintenanceprogram'.Woerk nin hbildin tin t-hp threnqirepd knnw1eglpep shouilti hp hbegn nromntlv,

and continue on a regular basis to determine traffic patterns and trends.

28. Oman has about 1,800 km of coastline with some natural harbors,but has no port with deep water berths although one (Port Qaboos) i-s now

under construction at Mutrah. At present, lighterage ports are located atMi nah al FLahal , ̀ -v-trah, M^uscat and Rayrsut (Dhofar P-nrovince,);4 inflfliition,

numerous beaches along the coastline are used for loading and unloadingdhows. The great bulk of port traffic represents imports from abroad intoOman, with dry cargo exports and coastal movements being of minor importance.

-1'ra al Faalisfr th1e exclusive use of PD(O) ar.d handles not only the

equipment needed for exploration but also the supplies for PD(Q)'s largepermane'nt establishment '1 n lan.

29. Tmere zla:s Ueen a 'Larg lnlclrea Ln 'lIIJULmLr s±ILntce 19*Js 'LIjwever,

without major new oil finds the growth of imports into Oman will almostcertain' ly not coLt'inue at thlIe prtes ent hig Lt. E,Vten w'th LIM Lransf

of PD(O) import traffic to it, Port Qaboos is not likely to be utilized tothe full capacity of its first stage for some time. Dredging to provideadditio'nal deep water berths should be postponed until such time as trafficgrowth has been established, and an economic timing determined for theexpansion. In May 1971, the Dutch Consultants NEDECO prepared a report onthe man'agement, organization and operation of Port Qaboos. It proposes,inter alia, the establishment of a Port Authority of Oman to manage andadminister all port activities in the Sultanate; the Port Authority shouldbe established promptly with a view to coordinating port operations and

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investments throughout Oman. Some technical advice may be needed in settingup an appropriately staffed organization for a future Port Authority; itsefforts would need to be concentrated, in the first instance, on the facilitiesat Port Qaboos.

30. The same conditions of climate and subsoil *h.,hich make much of Omandirectly accessible to motorized vehicles also provide numerous natural land-ing -laces for lighit aircr-aft. Primitive airstri are available in all partsof the country including a few in otherwise inaccessible points in the moun-tains. A. i4n the case of roadds, he ,,ost irportant issue therefore is notto extend air services to points not previously touched by them, but tolower the Cost and enhance the quality of these services.

3t. Dor.estic airfie.lds ikn lvl.ian are at present undUer thle Jurisdictionof the military authorities or PD(O). The Sultan of Oman's Air Force (SOAF)operates eighLt scheduled dUo,estiLc serv,ces on whLich civilians are carr'iedUfree of charge to the extent military requirements do not preempt space.PD(O)contracts wLitL Gulf A-viation /an alfiliate of BOvAC b.ased in Bahrein)to provide for its own personnel services. No data are available on pas-sengers or tonnages flown by either of the two operators.

32. International air services are at present being operated from Baital Falaj (near Mutrah) by Gulf Aviation (in which Oman has an 18 percent shareownership) and to a limited extent by the military authorities. The existingfield-at Bait al Falaj is short, is surrounded by mountains and has no facil-ities for night flying. It is therefore being abandoned in favor of an en-tirely new airport at Mezoon on the coastal plain northwest of Mutrah. Thepost of Director of Civil Aviation was recently created; his principal taskwill be operating Mezoon Airport. Other civil aviation functions should begradually vested in this Directorate, including the assessment of internaldemand, the licensing of internal air services and the operation of internalcivil airfields. As a basis for such additional responsibilities, the Govern-ment should first have studies carried out on the demand for internal airservices, the possibility and desirability of separating military and civilaviation functions, and the policy of the Government as a shareholder inrespect of the services to be provided by Gulf Aviation in Oman.

33. The likely trends in Oman's transport sector, or the areas wherefurther large-scale transport investments should be made, are not yet clear,because it will be several years before stable patterns of commodity andpassenger movement become established. On the contrary, with certain bottle-necks which are now being remedied, it seems evident that for the next fewyears Oman should not embark on major new transport investment, but insteaddevote its resources to consolidating the institutional framework for managementand operation of the transport sector, particularly in road maintenance.

34. The Government has before it a recommendation that the construc-tion and maintenance of all public works in the Sultanate be entrusted toone agency of Government. This approach seems realistic in view of the rel-atively modest volume of public construction in the various subsectors of

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its economy; however, in order to provide for better coordination of trans-port, all functions related to the planning, investment management andmaintenance of the transport sector should be vested in the same Ministrywhich, in view of its other public functions, might be called the Ministryof Transport and Public Works. Some technical assistance may be requiredin setting up the new Ministry, particularly in the field of transportplanning, public works management and maintenance.

Power

35. The main public source of electricity is the Oman Government PowerCorporation's (OGPC) diesel power station at Riyam, between Mutrah and Muscatwhich serves both cities. There is another government owned power stationat Salalah, some smaller units for army, police depots and other governmentstations in the country, and several private units, the biggest of thesebeing owned by PD(O). All public electric power generation is by dieselengines using imported refined oil.

36. After mid-1970, consumer demand for power in the capital area roseat a phenomenal rate. The short-term supply strategy has been the installa-tion of additional diesel units and a program of continuous expansion oftransmission lines. The authorities are now reviewing their objectives forthe power sector, and are making arrangements for an appropriate feasibilitystudy to identify the least cost alternative for meeting the growth of demandfrom 1974 onwards.

Education

37. There were about 58 primary schools (grades 1-6) in Oman in 1969;50 of them were Koranic, 3 secular, and 5 private. A trade school was builtin 1969 to help meet the needs of the oil industry. Enrollment was less than1,000 in the three secular schools. Tn July 1970 radical reforms and policyclhanges for modernization and development were announced; education was intheory made available to all. By March 1972, when the first reliable schoolstatistics were comniled, the number of schools had increased to 45, the en-rollment to 15,800 and the teachers to 443. This expansion has led to theoperation of schools in noorlv equipped physical facilities such as tents.private homes, rented buildings, thatch structures; only a few relativelymodern school buildings exist, but the situation is improving.

38. There is no teacher training scheme in the country. Teachers are

either Omanis trained abroad or expatriates; only a few have even minimumqualifications. The number of qualified students available for teachertraining will he a serious constraint on the supply of teachers for a con-siderable period, while the number of reasonabyv well nrenared teachers.(mani and expatriates, will largely determine further expansion and improve-ment of the education system.

39.Oman has a -et no ca-acit- to produce its own textbooks and teach-

ing aids. The curriculum is dictated by available textbooks, which are cur-rentl pro by Qaa, but which will from the 1972-73 school year be

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provided by Kuwait. The educational structure will then be changed from6+3+3 to 4+4+4. a system which offers considerable flexibility. The four-year primary cycle will substantially meet social demands at reasonablecost, but will be insufficient to provide lasting literary unless nrov4s4onis made for subsequent out-of-school reading. Intermediate education willbe terminal for the maioritv of the students and will prov4de some profi-ciency in essential skills. Comprehensive secondary education will beavailable to relatively few and will be geared to the middle-lepvl needsof industry, commerce, agriculture and public administration. Mobile units,radio education. and facilitie6 for out-of-Arhnol youth will nad an imnnr-

tant dimension to Government efforts to meet the needs of the rural com-munitv.

40. In quant4tative terms- Pduirational development- n tlhe sort periodsince 1970 has been impressive but, unless a strategy is developed and plansare carefully drafted, seriousv imhalqnrPe and c'rucpinl gans in education willoccur. No part of the educational system is without problem: (a) educa-tional goals nnd nolirv are unclear ndi no procedures or organizationalunits exist to formulate policy; (b) the Ministry of Education is notpronprlv organized nor staffed to J carry 1ut -lon -1-4- 4n g in

it is hard pressed to cope with day-to-day problems; (c) statistics arenot available and no schemeexists -or -o.i4ng on a continuingbasis; (d) there is no national curriculum; (e) teachers are largely un-qualified and no plans exist for either in-serviceor-service Li

ing; (f) building standards vary widely; new schools appear to be wellv ...y L--S. .A u LL E VLL x LL.La a-6U.LL l & L , LlU .6LL1±LdL U 1;

(g) plans for training middle level manpower in agriculture, industry andcomum.erce are inadequ . eJVelor.eUtLL Uo a sUUoUn edUUcaL1OnaJl sLrategy shouldbe a long-term exercise, basically by Omanis, with expatriate assistance ineducational pLar,,'Lng.

41. Taken together, the existence of reiatively good natural resourcesoutside the oil sector, the prospect of accelerating population increase andthe prudence of assuming for Ltie present that oil revenues may disappear inabout a generation dicate the appropriate overall development strategy, namely,to Udevote a suustantial part of oil revenues to the development of the non-oilsectors. This strategy could diffuse benefits from oil income through thepopulation, and in the longer run couid ensure that the economy remains viableeven if oil revenues, which are wholly in foreign exchange, disappear. This,iLn turn, lnuicates, as a su'b-strategy, that a considerable part ot the growthof output should be export oriented. New discoveries of oil in commericalquanttLies, should they occur, might seem to lessen the urgency of neededpolicy decisions, but would not in fact warrant change of this long-rangestrategy, since ultimately oil is a depleting, non-renewable, resource. More-over, any new oil discoveries would probably also deplete in about a generation.

42. The first, and in the short term most pressing constraint uponpursuit of this, or any other, strategy, is a lack of knowledge in almost

every sector of the Omani economy. The second is the lack of an institu-

tional framework geared to econuomLc development. The third is the lack of

skilled manpower. These three non-financial constraints taken togetherdetermine not only the content of an effective development effort but also

its feasible scale and pace from time to time - that is, Oman's absorptive

capacity.

43. The level of fruitful future spending for development will depend

not only on absorptive capacity but also on financial resources. The ultimate

loss of oil revenues argues the need for establishing a tax system to provide

alternative fiscal revenues. Since oil revenes are xwholly in foreign exchange,

while new fiscal revenues will be mainly in local currency, Oman's external

borrowing capacity should be used sparingly in the medium term to conserve

her creditworthiness for the longer run future, and resorted to only in cases

where the lender can provide useful technical assistance for a sector or a

project, in addition to finance as such.

44. It is not too early for Oman to begin assessing probable future

financial availabilities, on the one hand, and the scale and timing of devel-

opment spending, on the other. The evidence for this is contained in the1972 budget which foresees a heavy overall deficit, basically because of

contractual obligations on major projects entered into earlier without ap-

parent consideration of their annual fiscal consequences. Looking beyond

1972, capital expenditures on on-going projects will decline rapidly, while

new current expenditures for their operation and maintenance will increase;

at the same time, very few proposed projects are now in the pipeline. Ob-

viously, many new projects, not yet identified, will be proposed and some

initiated in the coming years. Oman's experience to date strongly argues

against starting any of these on a piecemeal "crash" basis.

45. It is therefore suggested that a start should be made with perspec-

tive budgeting, or simple financial planning. On this approach, the likely

financial resources for development for each of the next (say) five years

would be estimated and placed alongside the annual requirements of proposed

pro_ects. Almost certainly, total proposals would exceed financial avail-

abilities, leading to a need to select between projects, guided by the

merit of individual projects, the priorities implicit in the basic devel-

opment strategy and the changing absorptive capacity in various sectors.

Prospects

4(0. The tImmedinte prospect is for a large fiscal deficit in 1972,

I(Inuc.I1t. -I balulnce Of payments deficit and loss of exchange reserves, andcontintiation If not aggravation of strains upon Oman's absorptive capacity,

ev.Ldenced by rises of prices, wages and rents. As has been said, this es-

sentially results from existing contractual commitments for some large de-

velopment proiects, plus enlarged military capital expenditures. This

pattern may recur in 1973, and even in later years, depending upon how

soon decisions regarding public expenditures are related to real and fi-nancial resources.

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47. Oman's development potential is good but longer-range prospectsare still indeterminate. since they depend on actions still to be taken,.mainly by the Omani Government. Oil revenues will probably increase, perhapsby 25 percent to 30 Dercent over the next five years and- dpanite fiscalperformance in 1972, there need not be a persistent financial resource gap.Provided military exnenditures are contalnped, crrent hudgetary surplusescould run at something like RS 25 million annually, which is also probablyabout Oman's absorntive cRanaritv for well rnnceivd AnA hbnaf4l4al develop-ment expenditures for the time being.

I. THE SETTING

Natural Resources

1. The Sultanate of Oman (formerly Muscat and Oman) covers an areaof over 260,000 sq. km (100,000 sq. miles) at the eastern end of theArabian PeninRula- It has a coastline of some 1,800 km long facing theArabian Sea and the Gulf of Oman, and land frontiers, some undefined, withthp PpAfle's nPrmrratrir Reputhlic nf Yemen in the qsouthwest- wlith Saudi Arabia…~~~~~~~~~~~~~~~~~~to the west and with the Union of Arab Emirates to the northwest. TheMusand am Peninsula in the north, separated by terrvitrv of thp Tlninn of theArab Emirates, is on the south side of the strategically important Strait ofHo-rmuz-.

2. The Sultanate is mostly desert and part muntainous. The Haiarmountain range, whose highest peak reaches 3,000 meters, runs from the StraitofIA Homu to SurV soulthleast o' M.. Bh atitmah coastal -lain,r rsome 250

km long and 2-30 km wide, is an important agricultural area between the moun-tains andU thLAe sea. A great clefl, tIe Wadi C-41 divides the Western -anEastern Hajar, and is a main route to the interior. The sand wastes of Ruba.l L;181ai or E L- p-ty Quarter reach' west of' thI- e WeI-s tie rn La-L r pnha -:ovince,

bordering the People's Democratic Republic of Yemen in the south, is suitableiuL agLricUlLULr anlU animIILd± I LUtULUL Y. "AL CLJ=CLL, JUIIOLA LCL O LOLAf^L' V. C2

ment separated by desert.

3. The area under cultivation is estimated to be about 89,000 acres,less tean 0.i5 percent of the totaJl area oU the country Iale 7.1 'II/. Al-

40 percent of the cultivated area lies on the Batinah coast, and the restmostly west of the najar mountain (interior Oman), pLus about 2,500 acresin Dhofar. There are no forests; isolated scrub vegetation is fairly common,particularly on the Batinan coast, supplying firewood. LHe Gulf of Oman andthe Arabian Sea provide fish for human consumption or for conversion intofish meal for animal feed and/or manure.

4. Temperature reaches about 40CC in June and July, with average tem-peratures of about 14WC during December and January (Table 7.5). Humidityis between 60-80 percent for most of the time. Rainfall varies between 37-172mm annually with interior Oman and Salalah (Dhofar) receiving the higher pre-cipitation (Table 7.4). Periodically, there are prolonged arougnts. TneHajar mountains receive considerably higher rainfall in the winter; there areno records of actual precipitation. Due to soil erosion and the consequentabsence of vegetation, rainfall runs quickly down the hillsides but a con-siderable portion percolates underground, and so supplies interior Oman and

1/ Table numbers refer to the Statistical Appendix.

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the Batinah, coas w4t-h water for irr 4latn a4 d do mAestic use throughout theyear. In Dhofar Province, precipitation is higher; the mountains behindSa.lalabh catch. thne s r Monsoon ralns, wth a v mber of perennial s-prings

reaching the coastal plain.

5. Little is known about mineral resources other than oil, althoughthe coUwLtry was reportedly tLLe site ofL ancient copper,7 silver, - coal

mines. The main oil fields are located in the Rub al Khali about 250 kmwest of M'1uszcat; exp'LoratiLon si8 corLt,Lnu,LrLg ,nr bUothl in.terior Oman, Dhl;Jofar anA.

in the Gulf of Oman and the Arabian Sea. There is as yet no significantindustry in Oman.

Population

6. Tnere has not been a population census. Estimates of total pop-ulation vary from 450,000 to as high as 1 million. The mission has selected600,000 as most plausible on present evidence, although the figure, taken byitself, is not of great immediate importance. It is the characteristics ofthe population, such as its age structure and geographic distribution, tnatis needed for planning in, for example, education and health. Although apopulation census Is obviously needed, a pragmatic approach, looking moreto the capacity to increase the supply of services such as educatiox., thanto the demand for them, can suffice in the meantime; supply is so short ofdemand that there can as yet be no question of over-shooting desirable targets.

7. The Batinah Coast, but also some few oases in the interior are themost densely populated areas (Table 1.1). Towns of importance are Muscat,the capital (7,000) 1/, the nearby commercial town of Mutrah (14,000), Nizwain the interior (10,000), Salalah in Dhofar (10,000), Sur, Sib and Sohar.

8. Population growth is usually said to be about 3 percent. 'Whatevertoday's growth rate may be, it will certainly increase in the future. Thespread of health services will lower death rates before birth rates fall.The rate of natural increase will therefore rise, while at the same timeresident population will be increased by the return of Omanis from abroad,and perhaps by the retention of foreign skilled and unskilled labor.

9. The people in the hinterland are overwhelmingly Arab, while on thecoast there are Baluchi, Persian and Negro admixtures, with many Indians andPakistanis in the capital area. The Indians (Banias) are often merchant orcivil servants whereas the Pakistanis or Muslim Indians (Khojas) are crafts-men or soldiers. Recently, many workers from India and Pakistan have beenbrought in on construction projects.

1/ In the 1830's, when Muscat was an important port for the Gulf and theIndian Ocean, probably 50-60,000 people lived in Muscat's vicinity.

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10. There are many tribes in Oman and tribal traditions persist. Abroad distinction can be made between the Ghafiri, with an orthodox SunniMuslim background, and the more numerous Hinawi, who elect their own Imam.The Hinawi came originally from Yemen while the Ghafiri arrived in a secondwave from Iran and Central Arabia. A significant distinction exists between

the interior, with a partly nomad population, and the coast where some townsdeveloned historically into outward looking "city states". Besides Muscat'sformerly large and profitable sea trade with India, the Gulf and East Africa

(Zanzibar) 1/, coastal agriculture produced an export surplus of dates andfruits, while fishing gave rise to both exports and trade with the interior.On the other hand, aariculture in the interior has, with a few exceptions,

been for subsistence, with little surplus. Oman's history has often emphasizedthe contlnuinQ tension between coastal Oman, more affected by world affairs.and interior Oman with an inward-looking tradition. Nevertheless, both thecoast aXnd the interior share imnnrtnnt ernnomic, social and politicalcharacteristics.

11. Besides agriculture, many Omanis are engaged in fisheries (which,like ship-building, lost importance in the last two decades), or in such rural

trades as pottery, cotton weaving, dyeing and clothing. Silver and coppercraL eLamen, as well as blacksmiths, Joiner and bud4e1rsov, no h fnirnr in

most villages. In the towns, there are civil servants, merchants, construc--ior. workers anA porters but recertl- also mechaniCs, electricians a-nd tax

drivers (Table 1.2).

Political Background

12. Oman is an independent Sultanate. The objectives and pattern ofGovernment were transformed at the en,d of July 1970 when Sultan Said bin

Taimur was deposed in a palace coup by his son Qaboos bin Said. Hithertothe country had a ruler who apparently bel'eved social and economic cha.ngeshould be very slow. Sultan Qaboos has removed many of the restrictionsformerly imposed on his people. Subsequently, a Large nu-mber o' 0Manis

have returned from abroad, some taking high positions in the administration.

13. Oman for more than two centuries had close relations with Britain,which were documented in a series of friendship arnd trade treatiLes. He

worldwide recognition as an independent state was temporarily blocked by theImam who claimed to be the elected leader of an independent (interior) Omanand wlho was exiled following an unsuccessful revolt in 1957. However, aftersome delays, Oman became a member of the Arab League and of the United Nationsin October 1971, and of the IMF and World Bank in December 1971.

11 Durina the 18th and early 19th centuries Muscat held the position of

chief entrepot of the Persian Gulf area. Omani-based ships and mer-chants played a sianificant role in Indian Ocean commerce. Thesecommercial shipping activities reached their peak at the end of the

18th century.

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14. Guerilla activities in the southern Province of Dhofar started in

1963 as an active opposition movement against the former Sultan. This movement

has since grown into a full-fledged guerilla action knowni as the Popular

Front of the Liberation of the Occupied Arab Gulf (PFLOAG). Military opera-

tions against this movement are still a major draLn on tlie Sultanate's resources.

II. RECENT ECONOMIC PERFORMANCE

15. Before oil exports commenced in 1967, Oman's economy, mainly sub-sistence agriculture and fisheries, virtually stagnated. The British Govern-ment made a fiscal grant averaging RS 1.5 million a year. Apart from twoagricultural experimental stations established in the early 1960's, therewas little public or private investment. With the advent of oil revenues,British budgetary support was terminated. Despite growing oil revenues since1967, little was spent on development until mid-1970. Sultan Quaboos, whoassumed the monarchy in July 1970 embarked upon a few ambitious developmentprojects, establisihed the beginnings of government administration and in-creased defense efforts against the guerillas in the southern Province ofDuofar.

Growth of Output

16. Per capita income was probably declining at a level of aboutUSS60-70 duiring the neriod 1960 through 1966. Thanks to oil exnorts whirhstarted in 1967, the average annual rate of growth of GDP was 36 percent andof aNP 92 percent from 1967 thrnough 1971.

Table 1: CONTRIBUTION OF MiOR SECTORS TO GDP, 1967-71

^^ r e>_ ^f rlp

Compound Pl.-teof Growth

1O07 1OAQ 19o6 107( 1071 107 -71

Jl. sector 37 69 J 73 72 J J I

Agriculture, iisherLes 17 4 14 12 4

IM 0 -7 '7 Clonstruction20 8 7 7 1-

PubLc alljinibstrkalt0Ln) 1 2 2 2 3 62

and defense )

Other 8 4 4 5 5 27

Total 100 100 100 100 100 36

Source: Table 2,1

17. In the first three full years of production of oil, 1968 through1970, there was little change in the non-oil sectors, which remained largelyrural and traditional. After 1970, increased public spending showed upmainly in the growth of construction. Agriculture (including fisheries) wasnot yet touched by the growth of the oil sector, showing an average rate ofgrowth of only 4 percent.

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Use of Resources

18. Over the period 1967-71, total consumption rose at an annual rateof 22 percent, gross domestic fixed capital formation at 32 percent and grossnational savings at 34 percent.

Table 2: S1U. RY OF M4ACRO ECONOMIC AGGREGATES 1967-1971(in millions of current rials Saidi)

Compound Rateof Growth

1967 1968 1969 1970 1971 1967-197-1

GDP 42.1 86.7 111.4 115.4 144.5 36Less: Net Factor

income Payments .6 23.7 33.3 28.4 33.6 -GNP 41.6 63.0 78.1 87.0 110.9 28Consumption, total 22.6 24.6 27.0 35.8 50.5 22

of which:- Private (20,8) (20.8) (21.9) (22.0) (24.4) 4- Government ( 1.7) ( 3.8) ( 5.2) (13.7) (26.2) 100

Gross Domestic FixedCapital Formation 12.7 10.7 10.8 13.1 38.4 32

of which:- Oil Sector (11.9) t 9.6) ( 8.9) ( 9.7) (15.7) -

Gross National Savings 18.9 38.5 51.1 51.3 60.3 34Gross Domestic Savings 19.5 62.2 84.4 79.7 93.9 48

- As a percentage of GNP -

ConsumDtion 54.3 39.0 34.6 41.1 45- -

Gross National Savings 45.4 61.1 65.4 59.0 54.4 -

Gross Domestic Fixed CanitalFormation 30.5 17.0 13.8 15.1 34.6 -

Source: Tables 2.2 and 2.3.

19. In the period 1967-71, there were two distinct phases. The firstrelates to the period 1967 to M4d-1970, -ith small development expendituresand low current public expenditures relative to GNP (about 10 percent).Since oi.l revenues increased bl y albout twenty tLiImes an'" public expendituresby about eight times, gross national savings almost tripled in this period.lhe secod Lphase opend ir, MU i1970, With thiLe change of government arid policy.Public current spending increased, reaching 16 percent of GNP in 1970 and 24percenit Of G4Nff in 1j9f1. Current expenditures expanded partly because of theincreased defense effort against guerillas in the south, and partly becauseof a rapid expansion of civil public administration. Public developmentexpenditures rose to 18 percent of GNP in 1971, from only 2 percent in 1970.

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2U. Tle oil sector proviUeu 85 percent of total gross ulomestL.L feU

capital formation in the period 1967-70, but fell to only 40 percent in 1971Decause of a shEarp rLse ol public i'nvestmitent. To taL CosIumbuIptioUn gLrW UVet

the period 1967-69 at an average rate of 10 percent, and during 1970 and1971 at a rate of 44 percent. It, however, included two arrhythMIc coU1pULents:

a) private consumption, including non-monetary subsistence agriculture, which

grew on average at 4 percent, b) government consumption, wnich statisticallyincludes all defense expenditures, rose steeply at an annual rate of 100 per-cent 1967-71, beginning from a very low base. Gross national savings werehigh throughout the period 1967-71, more than half consisting of publicsavings held as deposits with the banking system and reflected In the growthof exchange reserves.

Internal Finance

21. Government revenues were small before 1967, coming mainly fromcustoms duties, supplemented to a minor degree by a traditional religioustax, the Zakath, levied on some types of agricultural products. There werealso some rental payments for exploratory oil concessions. However, in totalthese did not cover expenditures; the Sultanate's finances were supported byBritish Government grants, at a level of about RS 1.5 million per annum.When oil exports began, British budgetary support was terminated.

22. During the five years 1967-71 the Government's oil revenues totalledRS 158 million ($380 million at then par value 1 RS = US$2.4). Over 1968-71,net foreign exchange reserves increased by about RS 79 million ($190 million);a substantial part of this can be regarded as public savings.

23. Oman's tax structure is still simple; oil revenues accounted for96 percent of the total in 1971, the rest being presently minor direct andindirect taxes. Direct taxation consists of income tax, introduced onJanuary 1, 1971, on corporate bodies operating within the country whichyielded about RS 300,000 in 1971. Indirect taxes consist of a traditionalreligious tax - the Zakath -, which yieled less than RS 100,000 in 1971,customs duties levied on all commercial private imports at a rate of 7 per-cent, which yielded RS 1.1 million in 1971, and a vehicle registration taxintroduced in 1971, which yielded less than RS 100,000 in 1971.

24. The first Government budget prepared was for 1971; in earlier yearsthere was little distinction between the finances of the Sultan and theSultanate. The figures shown below for 1967 through 1970 attempt to recons-truct the probable magnitudes.

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Tahle 3: SIUMARY OF (AOVERNMFNT FTNANC.E 1967-1972

(in millions of rials Saidi)

1967 1968 1969 1970 1971 1972(actual) (buAget),

Total Revenues 2.8 26.7 40.0 4.7 50.1 5of which:=A41 Devenue 1.90 2. 3 44.4 47.9 51.5

- * L _~ C I S .J . .. _ 1 7 . U L t . 9A IC I tf 7 '4

ULo LAiACILUJ.XUL C. C 4 e tL V U.J I-.S.O 1.0 O // I

of which:- Current 1.7 3.8 5.1 13.7 26.2.(Defense Current) ( .8) (2.6) (3.4) (5.6) (9.0) (13.9)(Defense Capital) ( .4) ( .7) (1.1) (6.8) (7.3) (15.3)- Development - .4 1.2 2.1 20.4 36.3

Surplus (+) Deficit (-) +1.1 +22.5 +33.7 +29.9 +3.5 -23.2

/1 Preliminary budgetary figures...ource: 'Tab.Les 5.1, 5.2' C..

25.J Lj~_ UL U .-ense dominated public expen-tures L roiLi 1 70 through 17/u,

accounting for 88 percent of current expenditure over this period. AfterJuly 1970, spending attitudes changed. Defense was further increased, butwith greater emphasis on military capital expenditures, which in 1970accounted for 55 percent and in 19i1 ror 45 percent of total derense spend-ing, compared with 25 percent over the period 1967 to 1969. The beginningsof a government civil service type of administration aiso induced an increaseof current expenditures. Development expenditure became, however, the mainsingle item in 1971, accounting for 44 percent ot total public expenditures.The new Government was able to increase development expenditure so quicklybecause the design of some big projects such as a port, an internationalairport and some principal roads had already been commissioned by the formerSultan.

26. Development expenditures had been small until 1970. Auditingrecords show a figure of only RS 400,000 spent on development until 1971,but in fact some development projects were started and a few completed inthe period 1967-70. These were Main Capital Water Supply, Government OfficeBlock (Muscat), Housing, Post Office, Muscat-Mutrah Sea Road, Port Qaboos(Phase I), Hospitals, and some other minor projects, to a total of RS 3.34million. When the new Government accelerated development spending, infra-structure was given high priority; development spending on ports, airports,roads and public buildings accounted for over 80 percent of public invest-ments in 1971. The budgetary estimates for 1972 maintain this proportionof infrastructure. Health and education constituted 13 percent of develop-ment spending in 1971 and is envisaged as 15 percent in 1972.

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2 7. Froiii ;967 thi rougi 1i7/u Lhe puUlLc seCLtU bLIOWeU heavy surpiuses -

in 1969 as much as 75 percent of fiscal revenues. In 1971 the surplus fellto 7 percent of revenues, wnile tne budget ror 1972 foresees a iarge deficit,about 43 percent of revenues. This has arisen mainly because of contractualcommitments entered into in 1970 and 1971, wnose payments peak in 1972. Thisis true both for public civil investment (Table 5.5) and for defense capitalexpenditures. Financial reserves are adequate to cover this deficit but, asdiscussed later, its emergence will have consequences for the domestic eco-nomy and lessons for the future. In the meantime, the medium-run outlookfor public finance is not necessarily gloomy. First, a reduction of militaryexpenditure, particularly on capital items, is not unlikely. Second, theprobability of some increase of oil revenues is high, mainly as a result ofpricing arrangements based on OPEC agreements, and perhaps some increase ofoil production. Finally, as discussed later in the report, considerablesavings are possible in furtlher development based oni proper design of newprojects in relation to economic needs, more critical selection of priorityprojects and their judicious timing.

28. However, the rapid growth of public expenditures could not remainwqithiout consequences in an economy ill-equipped to meet the sudden increaseof demand. Prices of foodstuffs and rents soared. Based on various indi-cators (there is no index of prices), the cost of living increased by over50 percent in the first quarter of 1972, as compared wvith the same quarter1970 (Table 9.1). Rental rates for the few rooms and apartments availablein the Muscat-Mutrah area jumped in many cases by over 500 percent. Also,prices for cement and other imported building materials increased sharply,partly due to increasing handling costs for imports, pending an improvementof port facilities.

29. Due to large price increases and the shortage of labor, wages andsalaries doubled as compared withi the first quarter of 1970. Lack of skilled,and to a lesser extent unskilled, labor induced an inflow of expatriates.This in turn affected the labor market, with discrepancies in salary levelsbetween expatriates and the indigenous population. A strike in September1971 in the Muscat-Mutrah area was partly the reaction of workers againstpay differentials, price increases and housing oroblems.

30. Three commercial banks onerate in Oman: the British Bank of theMtiddle East, the Chartered Bank Limited (formerly the Eastern Bank), andNational and Grindlays Bank Limited. There are no statutory Commercial orCompany codes in Oman. Banking is mainly due on mutual trust and personalcredit-worthiness. The commercial banks readily grant credits to largerlocal merchants, mainly for financing imports, at an interest rate of 8.5nercent= Fixed denosits fetch an interest between 4 and 3/4 nercrnt to 6and 1/4 percent per annum, depending on maturity and amount. Interest ondpnosits exreeding RS 50,000 is subiect to negotiation= The banks opernteunder an interbank understanding regarding banking hours, interest rates,rhargopQ exrhange rate margins, etr.

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31. There is no Central Bank The Omnn Currency Authority, uindpr the

supervision of the Secretary for Financial Affairs, was established on April19, 1970 (at present administered by the British Bank of Middle East) and isresponsible for managing the Government reserves, issuance of currency, andact-4ng as a correspondent for any foreign mon etary authority or internationalorganization. A national currency - the rial Saidi (RS) - was introduced inMNAay 1970 ,at par with the pound Sterl4ng, upon establi shment of th- Oarn

Currency Authority. Formerly, Maria Theresa Thalers (a full-bodied silvercoi.)n, an' th,e Ind4 ian Gulf aupee bad Ibeen extens4ivly .ueA The Omn C

IU L J iu tu.X1 -L..L. tL 1. £ ... L .. L. V.k SO t - fl*flL 1

Authority is obliged to maintain 100 percent cover in gold or convertibleforeiULgn exchange Lor tLe currency Lssue (Tau.Le 6.3.

32. PUI onetary movemienLts reflect L Ilhe f±Lnanci. alimpact ofJ. oil reveus

Money supply rose by 7 percent in 1969, by 120 percent in 1970 and by 76percent it I 197 1 (Table 6.11); part of' thLie expansiLon, ofL currency in 1970 isattributed to the introduction of the new rials Saidi. The increase ofmoney supply in 1971 resulted mainly from governmiuent spendULng. ClirL- onLLthe private sector and quasi-money movements show over the period 1968-1971high rates of growthi, the former about 65 percent a year, and tne latterabout 37 percent a year on the average.

External Sector

33. Before 1967, Oman had trade deficits which were partly covered byBritish financial support and partly by Government borrowing from mercihantsrather than from banks. After 1967, substantial trade surpluses emerged andforeign exchange holdings accumulated. Current account balance of paymentsreceipts are now dominated by revenues from the oil sector, permitting asharp rise of imports, particularly in recent years. Concurrently therewas a considerable increase in transfers abroad, mainly income transfers byexpatriates.

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Table 4: SUMMARY OF BALANCE OF PAYMENTS. 1967-1972

(in millions rials Saidi)

1967 1968 1969 1970 1971 1972 /1

Foreign exchange Receipts 5.9 30.1 43.6 50.1 55.3 58.3of whi4ch:

- Oil, net 4.4 28.5 42.1 48.8 53.8 56.5

- Other Exports .9 .8 .6 .4 .4 .4

- Services .1 .2 .3 .3 .6 1.0

- Remittanices fromni ab-road5A. .6 .6 .4 .4

Foreign Exchange PaymenLts 4.4 6.7 9.8 1 .6

of which:- Imports of Goods 4.2 6.0 8.6 15.6 34.5 52.0

- Transfers .2 .7 1.1 1.8 6.3 9.6

Current Account Surplus (+) +1.5 +23.3 +33.8 +32.5 +14.5 - 3.3

or Deficit (-)Changes in Reserves (- =increase) n.a. -22.0 -33.2 -32.5 -13.3 + 3.0

Other, net - - 1.3 - .6 - .2 - 1.2 + .3

/1 Preliminary estimates.

Source: Table 3.1.

34. The oil sector generated more than 98 percent of total foreign

exchange receipts over the period 1967-71. Oil receipts consist of revenue

payments to the Government plus local expenditures by the oil company and of

the contractors working for it; Government oil revenues consist of income

tax, royalty payments and minor rental payments paid in foreign convertiblecurrencies. Local expenditures equal local currency purchases by the oil

company including its employees and contractors; spent partly for capital

and partly for operating expenditures, covering costs such as local wages

and salaries, services, local materials and foodstuffs, company policy and

taxes for vehicle registration, etc.

35. Exports of traditional agricultural items, dried limes, dates,

tobacco and hides, have declined. Dried fish meal for fertilizers, which was

an important export commodity some years ago, has declined due to competition

from more efficient producers. Traditional exports are mostly directed to

the Gulf countries, and to Iran, Iraq and India.

36. Imports outside the oil sector rose sharply, especially after

mid-1970; in 1970, they rose by 81 percent as compared with 1969, and in

1971 by 121 percent as compared with 1970. They consist of Government im-

ports, commercial imports for the private market, and imports of contractors

undertaking nublic development proiects. In view of envisaged spending onpublic investment and increased public current expenditures, they might

reach a record level of about RS 52 million in 1972, or 92 percent of oil

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revenuesfas compared with only 20 Dercent of oil revenues in 1969. or 32

percent in 1970. The main items of commercial imports were foodstuffs,

accounting for about 35 percent of the total, consisting of rice, a dietary

staple in Oman, wheat and wheat flour, coffee, tea, sugar, fruits and veg-

etables. The remaining commercial imnorts were motor vehicles, non-electric

and electric machinery and parts, petroleum and other chemical products,text4les, cement, Ta productsq and lrnhnlic beverages and office supplies-

other building naterial and household items. The U.K. is the largest

supplier, with a share of about 15 percent, followpd by the EEC countripq-

Australia, Burma, India and Japan. There were also substantial imports from

these countries vi4a Dubtai and- B.ah recorded as imports from the GulIf Arpa.

3 Increased actor paymerts ac- pniOd the changei of CMovPrvernPnt

policy. They show a much higher outflow than inflow, arising from the invest-ment income of foreign cor,,panies, ma4nly P.D.(O), and remittances by expa-

triate civil and military manpower. They grew over the period 1967-1971 at

an average race oi over IU0 percent, thdis L lgh growth rate being due in

particular to profits and remittances of foreign contractors and their labor

force engaged in development projects. Outgoing factor payments were only

partly offset by incoming remittances from Omanis employed in the Gulf area

and to a lesser extent elsewhiiere. Incomin remittances were less than RS

600,000 annually in the period 1967-1971 and show a declining trend because

many Omanis returned. In 1972, estimated outgoing non-oil factor payments

may amount to RS 9.6 million, yielding a net outflow of RS 9.2 million, as

compared with a net inflow in 1967 of RS 270,000.

38. Oman at present has no foreign debt apart from a small suppliers'

revolving credit totaling RS 1 million, incurred by the Muscat Power Authority

for equipment imported in 1971.

39. Foreign exchange reserves increased steadily after 1967, the peak

increase being reached in 1969. Thereafter, their rate of growth slowed, the

increase being RS 13.3 million in 1971. At the end of 1971, governmenL re-

serves accounted for about 63 percent of total foreign reserves, tlle remainder

being the foreign assets of commercial banks. All foreign reserves at end

1971 covered thirty-three months of imports, net of oil sector, at the level

of 1971.

40. Prior to August 1970, many imports were prohibited, but Oman now

follows liberal trade policies; there are no exchange or other restrictions.

Capital transfers exceeding RS 20,000 require only consultation with the

Secretary for Financial Affairs.

41. Prior to December 1970, customs duties ranged from 6 percent to 76

percent ad valorem. The average rate of duty was 12 percent plus 1 percent

municiDalitv tax. In December 1970 all import duties were reduced to 5 per-

cent plus 2 percent municipality tax. Only alcoholic beverages are now

subiect to an import duty of 40 percent. There is an export duty of 5 per-

cent on traditional commodities. Government imports, imports of contractors

i,ndprtakino nublic development proiects, and imports of the oil company, with

the exception of tobacco and alcoholic beverages, are exempted from customs.

42. Budgetary aid from Britain was discontinued in 1967 with thecommencement of oil reveniues. ''LInce then, foreign aid hLUas been confinedlargely to technical assistance. Britain gives or is considering givingassistance in euucatlon (L;eachller's tra'iLnLng in the U .iN., SChIool equipmIIentLexperts), health (doctors, nurses, equipment), town development (civilengineers) and irrigation (-water resource survey). UNICEF, together with theQatar Government, is considering assistance in education. Abu Dhabi gaveassistance for health in 1971. An American church mission is staffing asmall hospital and a school.

Government Administration

43. Until 1970, there were no government civil services, and alldecisions regarding state affairs, including public investments and appro-priations for current public expenditures were made by the Ruler who had theadvice and services of a few expatriates. The new Sultan established newministries and departments and appointed nationals, many of them returnees,to some top positions. The government structure is still undergoing changes.

44. Central Government at present consists of nine ministries includingthe Secretary for Defense and the Secretary for Financial Affairs. These are:Ministry of Economy; Ministry of Communications, Labor and Social Affairs;Ministry of Land; Ministry of Health; Ministry of Education; Ministry ofJustice and Interior; and Ministry of Foreign Affairs. In addition, thereare independent departments, such as: Planning and Development, P.W.D.,Government Housing, Information and Tourism, Government Power Corporation,Greater Mutrah Authority, Planning and Development Dhofar, Printing andStationery. Heads of the ministries and independent departments are directlyresponsible to the Sultan. On the local level there are 37 governorates(wilayets), each of them headed by a Wali (governor), sometimes assisted bya deputy, and a ludge. They are supported by local police, and a radiooperator and clerk. These traditional administrative units function on thebasis of religious law and custom, with financial support from the CentralGovernment.

45. Apart from oil, there has been no sector development planning, letalone macro-economic or even financial planning. The PlanninR and DevelopmentDepartment, established before 1970 as a temporary body, retained as its mainfunction contractina for and ensuring implementation of malor investmentprojects already approved by the Sultan. The newly established ministriesbecame responsible for carrying out other minor proiects started after 1970.

46. The Omani Government has only recently started to create a statutorylegal framework for economic activity in the country. Among the first decreesis the one which regulates foreign investments nassed in the second quarter1972. According to this decree a Foreign Capital Investment Committee is tohe established nathorized to grant anprovals to foreign nationals to estab-lish a business in the country. The conditions for such approval reportedlyare, a) at least one nprtner musQt he Omni,4 h) a minim.in of 35 nprcent t

be contributed by Omanis (in some cases 66 percent). Approved investmentsare exempted from incom.e taxes for five years (tax holiday).

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III. PRINCIPAL ECONOMIC SECTORS

47. The oil sector constitutes the engine of growth for the Omanieconomy, contributing 95 percent of fiscal revenues and 98 percent of totalforeign exchange earnings. Agriculture with fisheries is the second mostimportant productive sector, providing livelihood for some four-fifths ofthe population (Table 1.3). It is still dominantly a subsistence sector,lacking modern know-how and inputs, but has good potential. The trar.sporta-tion sector started to develop only recently with heavy investments in somemajor projects. Education and health services began developing quickly overthe last two years.

Oil

48. Prospecting for oil in Oman commenced before the Second World War.The Iraq Petroleum Company Groun (I.P.C.) became the first concessionaire in1937, under the name of "Petroleum Concessions Limited", in 1951 the name

was changed to "Petroleum Develonpment (Oman) Limited". After 4eologicalsurveys, exploratory drilling began in January 1956; by March, 1960, P.D.(O)had spent L 12 million on unsuccessful explorations, All the I.P.C. grouppartners withdrew from the venture in 1960, except Royal Dutch Shell whichtook over 85 nprcent of the shareholding, the remaining 15 percent beingtaken by Partex 1/ (Gulbenkian Foundation). In 1967 C.F.P. - CompagnieFrancaise des Petroles - , bought two thirds of Partex 's share. Thus theshareholders of P.D.(O) are now Royal Dutch Shell, which also manages theP_D.(O), with 85 nercent, C.F.P. with 10 percent and Partex with 5 percent.The present P.D.(O) concessions encompass almost all the land area of Omaninrl,,dina Dhnf2r. 2/ An offshore concession in the Gulf of Oman was grantedto W. Phillips in 1965 and later taken over by a consortium managed byWintershall Petroleum, which in 1969 also acquired offshore concessions

formerly held by P.D.(O). Offshore prospecting is continuing.

49. Oil in commercial quantities was discovered in February 1964, andregular exports of crude starteA 4n August 19167. ThL-e ma'in oil' fiel,r Fahud,Natih, Yibal and during 1971 Al Huwaisah, in the Rub Al Khali desert, arelocated about 250 'ki southwest of Muscat behind the Haj ar m,,ountains. Tneproven reserves are presently estimated at over 2 billion barrels, or about

1/ Participations and Explorations Corporation.

2/ P.D.(O) relinquished Dhofar in 1951, but later, in 1969 obtained asix-year exnloration leaqe there. In 1970 PfD.(O)'s agreement areain central Oman was reduced to 60,000 square miles.

- 15 -

300 million tons, i.e. about twenty years' production. A 276 km pipelinelinks the oil fields with the tank farm at the terminal Mina al-Fahal and tothree offshore buoy moorings in deep water. The pipeline has a diameter of30 inches from the oil field to the mountains, 36 inches through the moun-tainous region and 32 inches thereafter, with a maximum throughput capacityof 385,000 barrels a day. Additional pumping stations could increase itscapacity if needed. The tank farm at the terminal, Mina al-Fahal. has acapacity of three million barrels consisting of six 350,000 barrel tanks andone 900.000 barrel tank.

50. Oil nroduction and exnorts increaspe stradlv thriughouit the period1967-1970 (Table 8.1). From 1968, the first full calendar year of production,outp,ut tontaled 241,000 ahrrlc a dnuy Tn 1969 output went up by 36 percent.In 1970, the production target of 360,000 barrels per day had to be reducedto 310,000 barrels per day in the fourth quarter, hence total output increasedonly slightly by about 1 percent. In 1971 output fell by 11.5 percent becauseof Aisappon-inting reseroir perfo-mane (Aec4n lng oLIl/ water snd ga presures)

and of delays in Yibal due to a blow-out in drilling there, and in spite ofaududit-ional production iLn AM1 tluwais&h A(i r. Dece,mber `1971 there were all together79 producing wells as compared with 63 a year before). At the beginning ofthLe year, prospects 'in 1*972S were productior. 'ecln'ng to 10mllion barrelsas compared with 107 million barrels in 1971. But some new discoveries inthLle f.Lrst I'thaLL 1 , not yet coLunercUially proveu, may change the picture.

51. All crude oil is exported, and no plans for a refinery exist atpresent; Omani crude oil is of good quality (API 33) with a low sulphurcontent (less than 1 percent), and shipping distances are less than fromterminals in the Arabian Gulf. The natural gas now being discharged atwellheads in the four oil fields amounts to aDout 120 to 130 million cubicfeet per day. It is of good quality with a calorific value of about 1,135BTU's per cubic feet, containing about 69 percent methane and only about 3percent of incombustible gases and no hydrogen sulphide, but so far it isused only in wellhead power installations.

52. in P.D.(0)s annual report for 1971 (the second one published), the1971 production costs per barrel, excluding payments to the Government, werecalculated at 54.8 US cents per barrel, of which capital expenditure accountedfor 64 percent and operating expenditure for 36 percent. Payments to theGovernment were over US$1.0 per barrel.

- 1 6 -

Tahble 5: SUMMARY OF PRODUCTION COSTS OF CRUDE OIL 1970-1971

(in millions of rials Saidi)

Costs 1970 1971

Total Capital 9.7 15.7Total Operating 6.7 8.8

Sub-Total 16.4 24.5

Payments to Government 47.9 44.4

Total 64.3 68.9

- As per ba,rrel -(in US$ cents at 1 RS = US$2.4)

1970 % 1971 ___

Capital costs 19.2 16% 35.1 22%

Operating expenditure 13.3 11% 19.7 12%Sub-Total 32.5 27% 54.8 34%

Payments to Government 87.8 73% 107.1 66%Total 120I 3 100% 161.9 100%

Source; Table 5.1 and 8.3 of the Statistical Appendix.

Capital expenditures were unusually high in 1971, 83 percent higher than in1970, because of intensified drilling and construction as well as replacementof the drilling rig lost in the 1970 blow-out at Yibal. Operating expenditures

also increased in 1971 at a high rate, 48 percent, due partly to the costs of

controlling the blow-out at Yibai.

53. P.D.(O) payments to the Government consist of royalty and income

tax payments and rentals payments for Dhofar and other concession areas. 1/Taken altogether they rose from RS 1.9 million in 1967 to RS 47.9 mililonin 1971. Income tax is paid on the net profits of P.D.(O) at the rate of 55

percent. For the calculation of net profits a "fiscal price" is used as a

slight variation from posted price to reflect the quality of the crude.

Oil revenues may increase in 1972 because of price adjustments according to

Tehran agreement; increase of production is still uncertain. Ilowever, the

1/ Royalty payments are 12.5 percent of the posted price on the volumeexported. Income tax payments are 55 percent of net profits, calculatedafter operating expenditures, royalty payments and a certain proportionof capital costs are deducted from gross receipts, calculated upon anaverage "fiscal price" which consists of an average posted price less theO.P.E.C. allowances (which were terminated by the Teheran Agreement) andthe salt allowance (which remains in effect).

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prospects for an increase of oil revenues in the medium run are good. Ifthe new oil findings prove feasible for commercial exploitation, productionmay rise by 10-15 percent. These, together with price adlustments machinery,can increase oil revenues, probably by more than 25 percent in 1975 ascompared withi revenues in 1971. Longer term prospects are, however, uncertain.Present proven oil reserves are sufficient for only about twenty years pro-duction.

54. Oman is not a member of the Organization of Petroleum ExportingCountries (OPEC); nevertheless, P.D.(O) agreed to adhere to the terms of theTphran Agreement. 1/ This resulted in an increase of the nosted orice forOman crude from $1.82 per barrel to $2.31 in 1971 and $2.50 for 1972, (Table8.2) and in an increasp of the income tax ratp from 0 nprrcent to S nperrent;

retroactive to November 14, 1970.

55. P.D.(O) also contributes expenditures for wages and services, localmaterials, and other local paym.ents to the Oman i enomy. They roe Fromestimated RS 2.5 million in 1967 to RS 5.9 million in 1971, and are likelyt Lo contIALnue t o grow especially . tLhe ava4iabil4ty of 'local, labor, products

and services expands. In 1971, P.D.(O) employed about 73 percent Omanis inits staffi. It. allso ran th-e ',an Technicall Trade Sch-ool `hicl; was h-andled over4.l � L I .LL ±U L1L L.L1 L .JLLL 4. ~LLiI±LaL IL cU~ . iJLLU WLIXI W1 LL~LUU U

to the Ministry of Economy on October 1, 1971, as well as a well equippedhospital at Mina al-Fahal. It also paid scholarships for a few OmUanis abroad.

5. Ps.D.(O) is continuing to prospect. I 1971 , iL r,,aue 6 s Lic

surveys, geochemical surveys in a number of areas, and topographical surveyswith emphasis on Dhofar including aerial photographing and mapping. Theseactivities led to new onshore findings of oil, which might prove feasible forcommercial exploitation. The orrshore prospects under the concession o thne

Wintershall Petroleum group are still too uncertain for any prognosis.

AGRICULTURE

57. Agriculture plays a significant role in the economy of the Sultanate,not only Decause or its contribDuion to gross aomestic producc ana exports(non-oil exports are entirely of an agricultural and fisheries origin), butalso by providing employment for the majority of its people. Agriculture, in-cluding fisheries, currently supports about 80% of the population and its de-velopment is necessary for their well-being. The agroclimatic resources otthe country are suitable for a wide range of agricultural activities. Theimportance of developing the agricultural sector is thus apparent.

1/ The Tehran Agreement signed by the Government of six oil-producingcountries and twenty-two international oil comnan4es came into effect

on February 15, 1971. The main provisions were an immediate increasein norted nrire of IS UTS rents per barrel, arhedttle of further in-

creases in the posted prices over a period of five years and an in-Cron_a of the income tax rate for the oil comnnnies to SS percent.

The terms of the Tehran Agreement were incorporated in the ConcessionAgreement. The terms of the Geneva Currency Agreement of the 20th

January, 1972 concluded between the Gulf States and the oil producingcomn-anies were also incorporated in the Concession Agreement.

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58. Crop and animal husbandry are practised in both the coastal andinterior areas, and fishing in all coastal areas but predominantly on theBatinah coast. There are no substantial forests other than small andisolated stands of scrub vegetation, particularly on the Batinah coast andin the foothills of the mountains in the Province of Dhofar.

59. The country can be conveniently divided into three main agricultur-al regions. The Batinah coast, east of the lajar mountains and covering anarea of approximately 250 km long and 2-30 km wide from the city of Shirnaz tothe north to Sib in the southeast, is potentially the most important. Only esmall portion of this area is currently under cultivation. The second is ininterior Oman in the form of a number of isolated oases usually adjacent towadis west of the Hajar mountains. Dhofar Province in the south. particulair-ly the coastal plain, forms the third important agricultural region.

60. The pattern of production in the Batinah coast and in interior 'nwi-has close similarities. In both regions annual and perennial crops are grc-wnDates, limes, mangoes, bananas, lucerne, tobacco, onions and various othervegetables are the main crops in the Batinah coast. In interior OCman han-a7mand tobacco are substituted by wheat. In Dhofar Province, with differingclimatic conditions, coconuts, bananas and lucerne form the bulk of prodiic-tion.

61. Table 7.1 provides an estimate of the area currently cropped withieach of the main crops, together with an estimate of the nrnduction and re-tail value. To a certain degree farming in Oman has been, and still is, ofa subsistence nature, with the farmer atteinnting to grow most of his basicfood requirements with surpluses, if any, being marketed either for cash oron an exchange basis with neighboring farm.ers Under these circl'mstan.cesthere is of course little crop specialization. Most farmers crop substan-tial parts of their holdings to dates, limes, bananas, lucerne and tobaccotogether with the odd tree or trees of mLango, guava, mulberry, pomegranate,grape, etc-, as well as vegetables.

62 Animal husbandry is extensively practised in al l regions. In thcBatinah and in interior Oaan sheep and predominantly goats, of local breeds,are present in lar[ge nu-mbers (Tale 7.2). Generally, each farmer keeps asmall number of goats and sheep which, during the winter and spring months,are grazed on natural pastures around tte village and for thle reLaLuLer oL.the year are stall-fed on lucerne, dates and fish meal. A number of farmershave larger herds of sheep and goats but pretty much the saue pattern ofhusbandry is followed. In Dhofar Province there is a significant cattlepopu'LatiLor, particularly 'LrL thLe £oothiLiLs of the Quara mountains, whichreceive the monsoon rains in the summer and where there is abundant naturalvegetation for grazing. At the end of the monsoon season, the vegetationdries up quickly and is then utilized by the cattle as standing hay. Up tothe early 1960's significant exports of clarified butter and hides were madefrom Dhofar to Aden and Muscat, but the trade has now ceased due in part tothe guerilla hostilities, the migration of the people to other areas, and todifficulties of communication. Poultry are also kept throughout Oman insmall numbers.

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63. The Gulf of Oman and the Arabian Sea are relatively rich in fish.Fishing of a traditionan nature has long hben an important nccptinoinn inOman. Catclhes have recently declined from an estimated high of over 100,000tons per annum. to an estimated cirront ratc-h of about 60,000 tons valued atRS 2 million; there would, therefore, appear to be considerable potentialfor increoacing cntrhsc Fiqh freals nr dried, Is not onl used for huimanconsumption but also in the form of dried fish meal for animal feed and asmanure. There were in the past considerable exports of dried fish but thistrade hlas almost completely stopped, (lue in part to the competition fromother producing countries using more efficient methods of fishing, procesoand marketing. At the same time, transportation of fresh fish within thecountry i9t st-iat t14mited to the g-enertat v-4inty4 of Ithe As, , u to t

poor communications and the absence of refrigerated transportation. In early1972 a Unite n Stat C les b iased compaiiy has Ibeent- engaged by tLhe Glovernment for afisheries survey extending to three years at a total cost of about US$3 mil-4LioL . IL coUitiUerciCa[ly exp'loiUtab. Le L fisheriCes resources are confirmeLelI a JU.LLL

company between U.S. interests and the Government would be established toundertake both fishlng and the sale of fLish aoroad.

64. Farming in Oman is based on smaii noidings worked by owners or ten-ants. According to a recent survey, about 66% of the farmers farmed morethlan one farm/garden. The ratio of farms/gardens to owners/cultivators was3:1 in interior Oman and 2:1 on the Batinalh coast. There are no large-scalefarming operations in Oman.

65. As a result of low precipitation and its unpredictability, irrigationis of the utmost importance to agriculture. In fact, with the possible excep-tion of some rainfed rough pastures in the winter and early spring months,there is no rainfed agriculture in any part of the country. Agriculture andagricultural productivity in Oman therefore is, and will continue to be, com-pletely dependent on the availability of water for irrigation. The onlyexception would be, as stated earlier, the foothills in the Province of Dhofarwhich receive tlhe monsoons in the summer and where more extensive naturalpastures are available for feeding fresh or as standing hay.

66. Water for irrigation purposes is obtained from open wells, up totwelve feet in diameter, at a depth of 30-80 feet in the Batinah coast andin Dhofar, and from "Falaj` and/or wells in interior Oman. The wells arebecoming increasingly mechanized; it is estimated that there are over15,000 wells in the country and that about 95% of them are already fittedwith pumps driven by diesel engines. Usually in the Batinah coast there isone well to a garden/farm, but there are instances wlhere, depending on thiesize of thle garden/farm and well output, two or more wells exist in thesame garden. The ratio of wells to gardens/farms in interior Oman is high-er, indicating the relative scarcity of water vis-a-vis the Batinah coastand( the relatlvely smaller output of thie wells. There is, however, no in-formation avalable on thie rate of water extraction from either interiorOman or the lBatinah1 coast. The "Falaj" system, reputedly of Persian origin,is used 1in Interior Oman. Basically, the "Falaj" is of ancient construction

- 20 -

and taps the water near its source, transports it part of the way under-ground and then overground to its destination. There is no informationcentrally available on the number of "Falaj" nor on their current state andloutput. There are, however, indications that some at least are now disusedeither through blockages or due to a lowering of the water table, probablybrought about by drought and/or continuous pumping fronm wells.

67. Soil salinity and/or soil alkalinity wery observed in variousareas of the country. Water salinity was also noted in a number of cases.HIowever, no soil or water surveys have been carried out nor are there cur-rently any means of undertaking routine analysis of the above anid there-fore the imDlications cannot be fully evaluated at this stage. In viewof this, the urgent need for a soil and water survey in thie most importanitagricultural regions is self-evident.

68. In mid-1971 the Government of Oman commissioned a geophysical surveyand a water drilling program in the Batinah coast and in interior Oman at acost of about RS 295,000. Within this program, about seventy boreholes willbe dug; by the end of March 1972 some fortyone boreholes had been drilled.To that date the indications were that the Batinah coast has potentially morewater available than interior Oman. The current program, however, will notby itself lead to an accurate estimate of the potential water availability,reserves, rate of recharges and offtake, all vital factors in maintainingand increasinIg agricultural productivity.

69. The on-the-farm water distribution and irrigation is traditionaland wastefuil. Earthen channels are used to distribute the water within thefields, resulting in considerable seepage and evaporation losses. Irriga-tion for tree crops are very frequent and heavy, usual]ly at seven to ten-dayintervals or oftener in the summer months and at fifteen to seventeen daysin the winter. Field crops, annual and perennial, are irrigated more fre-quently. No thorough studies of the water requirements of the maior cropsin the various regions have yet been carried out. Overirrigation is notonly wasteful of water, a precious conrmodity per se, but also leads toleaching of nutrients from the root-zones and to various diseases of theroot systems of miost crops. Furtlhermore, excessive water pumping increasesthe cost of production considerably.

70. The Department of Agriculture was established in December 1970,adlminlstrative~ly under the Mfinitrv of Fconnnniv Prior to this date therewas no Department of Agriculture as such, although work at two experimentalfarms a1n some xt-enCion Tw ork, mn:tl in ti.- vYr1ini4tar nf tIi, fnrmc wasc nrn-

ceeding under the auspices of the then Development Department. The Depart-ment has currently no 4-r4iA4ctji over-, - -tr4-ltf-r-l activi 4 ties in Nhinfnr

which, owing to the current military situation in that Province, are ad-Lidnistere[ d CUy the Department for lv p.lLtT Dhofar. a Th Depar.t of

Agriculture is now essentially divided into three divisions - administra-tion and p,lanning, Cextension and ex-pLerimental farm,s. Tn addi tion, a

Central Research Institute is now being set up at Rumais. In Dhofar,

- 21 -

where the agricultural activities fall within the jurisdiction of the De-velopment Department, there are two experimental farms in Salalah whichcommended operations in 1971 dealing with crop and animal husbandry.

71. There are no other supporting services in Oman. There is no agri-cultural credit bank, no farmer cooperatives, other than the onion growersassociation, no government denartments for water development or fisheries,no agricultural training schools, and no organized planning division whereagricultural development proiects and strategy can be prepared or evaluatedprior to their submission for approval. In addition, there are no marketingboards, no agricultural processing of any kind, nor any graAing or packinghouses.

72. It is clear that Oman has considerable potentialities for increasingagricultural productior.. Enarly increases in the productiv'ty of ex'stilngcrops could be achieved through the increased use of inputs such as fertili-zers, pesticides and true to type certlfled and diease-free seeds. A wellconducted applied research program, in conjunction with an improved extensionSer--ice, would assure considerable increases Ld n prouuctivity a few years afterits commencement. In the longer run, increases in production could be ex-pected from new lands, particularly on the Batinah coast and potentially inDhofar, which could be put under cultivation. The increase in productionar.ising fIrom Lhor'Lzonta'L expans'ion wll ultimately depend on water availabil-ity, which is essentially the limiting physical factor for agriculture invman. The extent o' new lana and of these water resources will not becomeknown with any degree of certainty until proper surveys have been carriedout.

73. To increase agricultural productivity, to diversify production andto increase exports, both in quantity and range, so as to take full advantageof Oman's agroclimatic conditions and geographical position, considerableattention needs to be paid to the functions and role of the supporting serv-ices, particularly those of the Department of Agriculture, as well as to theavailability of agricultural credit, processing and packing plants and tomarketing. Currently supporting services have many deficiencies, reflectingin general the long years of neglect of the agricultural sector.

74. Oman is likely to face increasing difficulties in the export of itstraditional export crops such as dried limes and dried dates, particularlywithi the relatively quick output growth that can be expected through increas-ing use of inputs; exports of dried dates have already declined from an esti-mated 4-5,000 tons per annum prior to 1961 to about 2,000 tons in 1971. Di-versification of agricultural production, processing and the finding of newmarkets wL[l therefore become increasingly important in the years ahead. Abns Ic Atimi o(f agricultural policy should not only be to increase production oftraditional. crops but also to diversify production by encouraging new cropsfounid suitflne [or the iigroclimatic conditions of the country and competitiveln botih le local a11d export markets. Undoubtedly part of the increase inoutput of both traditional and new crops would be consumed locally, reducingat the same time the imports of such commodities. Ilowever, significant exportpossibilities exist in the nearby markets of the Union of Arab Emirates; Oman,

- 22 -

because of its proximity and agroclimatic conditions, could be in a good posi-tion to compete in such markets. In addition, packing and processinu plantswould offer the possibility of exporting to much wider markets. There arealso nossibilities of exporting out of season, high value crops, particularlyvegetables, to Europe. Livestock, particularly in Dhofar, would appear tooffer gond long-range export potential, after the cessation of hotilities

there.

75. Currently, there is very little farm mechanization with the farmwork relyvina n1Tno-t exclusively on hand labor, which is not only costly butis becoming increasingly scarce, particularly during harvesting. Particularattentinon therefore needstobepid b n to the testing, introducrtinn and aval -ability of small agricultural machines, such as small two-wheel versatiletractors and small threshers for harescting g-rin rrnnc Q w1l nc nther smnl1

agricultural implements and machines aimed at speeding up farm operations.Due consideration should also be -iven to the possibility of staggering a-ri-

cultural production, either through the cultivation of different crops or d1f-f:erent varieties, so th-at their peak demands for labor do not coincide. Mecnall-ization will, of course, be clearly related to the size of the holdings, with1 .. ,.-r,.4 +.r bn

4n mn.4 e.b a< Fr. Ul

4rn mor.hnn4r1 o4A r. enrnA,ut-t4r.r T1-.4clarger units being mo-e SU41-.a1vf- -4" us.. ml- 4aa su_. .

aspect should be very carefully examined in conjunction with land leasing

76. At seriLous, if *.emporary, constrain t onL thel agrclt~JLural. Uev=eULop.Leof Oman is the scarcity of trained Omanis who could study, initiate and sus-taLnL econom'LcaLClly viable developmIent acti LviL ti UntlT t1h is4 constraint

be eased, Oman will have to resort to the services of suitably experiencedexpatriates. In t[is respect it-terlldLiuHdi. ULrga dLLUaiL adI agncies UTight

be in a position to provide assistance.

77. The following actions, with the objective of establishing a soundfoundation for future agricultural developm-ent, are suggested for conLsidera-tion:

(a) A Ministry of Agriculture and Fisheries should be established.This Ministry would be basicaily responsible ror agricuituraidevelopment and planning, including research and extension, andshould include the present Department of Agriculture as well asan activated Department of Fisheries and a new Water ResourcesDepartment. The Water Resources Department would be responsi-ble for the development of the agricultural water resources ofthe country. Wvsith adequate staffing, it would enable the Gov-ernment to proceed with both water development planning and awater policy, including necessary legislation so that this pre-cious and probably limited commodity can be adequately controlledand conserved, ensuring its continued contribution to agriculture.The work of the Department should include an inventory of waterresources, viz., collection of all data on precipitation, surfaceand ground water resources as well as the ground water extraction,

- 23 -

thus establishing a reliable balance sheet of the potentiailyavailable water. Based on these data and on the results of soilsurveys, a program could then be drawn up tor the tuture utiiiza-tion of all additional water supplies. An active Fisheries De-partment is necessary in view of the current and potential signif-icance of the fisheries subsector. The Department must be in aposition to carry the results of the current fishing survey, to-gether with improved technology, to the local fishermen, thusassuring substantially increased catches.

(b) In addition, the present Department of Agriculture must be con-siderably strengthened. The current extension centers, becauseof the relatively large size of the country and difficult terrain,particularly in the interior, cannot give thorough coverage andmust be gradually increased. Early steps should also be takento remove from the extension services all responsibilities otherthan those of advising and demonstrating to the farmers new vari-eties, improved production technology, etc. The agriculturalresearch branch of the Department must be substantially strength-ened with experienced specialist officers and it is strongly sug-gested that this be examined in conjunction with the new researchcenter at Rumais. This center must be adequately staffed andequipped to enable it to undertake all necessary applied researchwork in every aspect of agricultural production in Oman, includ-ing animal husbandry which has so far been neglected. The workof the strengthened Department of Agriculture should includefarm surveys to determine crop acreages, yields, size of holdings,a soil survey to determine the size and suitability of the non-cultivated lands, as well as the creation of seed and seedlingproduction facilities, including a seed testing laboratory,seed cleaning and disinfecting equipment, etc., assuring theproduction of at least part of the annual requirements of thecountry in the above items. Part of the requirements in seedscan be contracted out to progressive farmers from whom. aftercertification, the seed can be purchased by the Government ata premium and processed.

(c) The establishment of a small planning unit. Dreferablv withinthe Ministry of Agriculture and Fisheries, which would be re-sponsible for evaluating agricultural development Dlans.

(d) The desirability and feasibility of establishing an AgriculturalCredit Bank, with adequate resources to issue loans to farmerson slhort, medium. or long term- should be examined. Surh loansslhould probably be issued only after obtaining the views of thelocal extension agent. to heln ensure their nroducrtiv use=

- 24 -

-7°. In adltl-ilon, it is suglgeste-d t1hat `he fecas`bllity of' slmp]( gradingI Q . Lk ~UUL IL J.l IL _L LU LI CL ~Ltk I. -L IU 1.-L L~ UI4.iIjL VL lIU I i

and packing plants for dates, processing plants for limes, As well as simpleUehydration plants fLor 'lucerne adI 1fJ s,k 4n ork'er tU o LJprodUUce LULceLrnek ImLeaI.L andU

fish meal should be examinied. It is possiblc tlhat such plants couldl open ulpnew anu reri-LunCeratLve export possiblilt'ies.

79. In view of' thLe li,,itations .1n the infrastructUre Lof tiiC siupporU 1-

services, the lack of information on the physical resources of the country,tLe non-availability of locaul expertise andU tLihie absence of reliab)le data on11

current crop acreages, production, etc., the desirability and possibility oftechnical and advisory assistance to Oman, perhaps by a small team internationaiin character, to assist the Government with the formulation of agriculturalinstitutions and policies should be considered. Sucn assistance should payparticular attention to the economic and social role which agriculture shouldplay in Oman's developmentL and Lto tLe needs for agricu Lural research, exte-l-sion and education, agricultural credit requirements, marketing and processing,(possibly on the basis of cooperatives), as weii as to the optimum developmentof the land and water resources of the country. The team should also beequipped to look into the possibilities or setting up seed and seediing pro-duction facilities and to evaluate the possible role of cooperatives, orother suitable organizations, in the future supply of agricultural inputs,particularly fertilizers and pesticides.

TRANiSPORT

80. The traditional economy placed little demand on the transport sys-tem. The bulk of marketed products had to move only short distances, perhaps20 kilometers, whiclh was within the range of conventional donkey and cameltransport. A few products were carried over longer distances and the flowis still small but likely to increase witlh economic expansion. Transport bydhow is common along the coast but no records are available. Some farms,primarily along the Batinah Coast, require diesel oil to fuel pump engines,and chemical fertilizer to supplement animal manures, but again no data areavailable on these commodity movements.

81. The transport requirements of the oil sector are largely self-contained within the operations of Petroleum Development (Oman) Limited, theconcessionaire. PD(O) operates its own port for imports of equipment andexports of oil, constructs and maintains its own access roads to the oilfields, contracts for its own internal air services and uses its own pipe-line to evacuate the crude oil from wells to port.

Roads and Road Transport

82. Because of Oman's dry climate, sparse vegetation and high strengthof the subsoils, it is possible to drive across country except in the moun-tainous regions, and it is estimated that more than 90 percent of the villagescan be reached with four-wheel drive vehicles. In general, therefore, theconstruction and maintenance of roads is not needed to provide access tomotorized transport. but more to reduce its costs and to improve service.

- 24 -

-7°. In adltl-ilon, it is suglgeste-d t1hat `he fecas`bllity of' slmp]( gradingI Q . Lk ~UUL IL J.l IL _L LU LI CL ~Ltk I. -L IU 1.-L L~ UI4.iIjL VL lIU I i

and packing plants for dates, processing plants for limes, As well as simpleUehydration plants fLor 'lucerne adI 1fJ s,k 4n ork'er tU o LJprodUUce LULceLrnek ImLeaI.L andU

fish meal should be examinied. It is possiblc tlhat such plants couldl open ulpnew anu reri-LunCeratLve export possiblilt'ies.

79. In view of' thLe li,,itations .1n the infrastructUre Lof tiiC siupporU 1-

services, the lack of information on the physical resources of the country,tLe non-availability of locaul expertise andU tLihie absence of reliab)le data on11

current crop acreages, production, etc., the desirability and possibility oftechnical and advisory assistance to Oman, perhaps by a small team internationaiin character, to assist the Government with the formulation of agriculturalinstitutions and policies should be considered. Sucn assistance should payparticular attention to the economic and social role which agriculture shouldplay in Oman's developmentL and Lto tLe needs for agricu Lural research, exte-l-sion and education, agricultural credit requirements, marketing and processing,(possibly on the basis of cooperatives), as weii as to the optimum developmentof the land and water resources of the country. The team should also beequipped to look into the possibilities or setting up seed and seediing pro-duction facilities and to evaluate the possible role of cooperatives, orother suitable organizations, in the future supply of agricultural inputs,particularly fertilizers and pesticides.

TRANiSPORT

80. The traditional economy placed little demand on the transport sys-tem. The bulk of marketed products had to move only short distances, perhaps20 kilometers, whiclh was within the range of conventional donkey and cameltransport. A few products were carried over longer distances and the flowis still small but likely to increase witlh economic expansion. Transport bydhow is common along the coast but no records are available. Some farms,primarily along the Batinah Coast, require diesel oil to fuel pump engines,and chemical fertilizer to supplement animal manures, but again no data areavailable on these commodity movements.

81. The transport requirements of the oil sector are largely self-contained within the operations of Petroleum Development (Oman) Limited, theconcessionaire. PD(O) operates its own port for imports of equipment andexports of oil, constructs and maintains its own access roads to the oilfields, contracts for its own internal air services and uses its own pipe-line to evacuate the crude oil from wells to port.

Roads and Road Transport

82. Because of Oman's dry climate, sparse vegetation and high strengthof the subsoils, it is possible to drive across country except in the moun-tainous regions, and it is estimated that more than 90 percent of the villagescan be reached with four-wheel drive vehicles. In general, therefore, theconstruction and maintenance of roads is not needed to provide access tomotorized transport. but more to reduce its costs and to improve service.

- 24 -

-7°. In adltl-ilon, it is suglgeste-d t1hat `he fecas`bllity of' slmp]( gradingI Q . Lk ~UUL IL J.l IL _L LU LI CL ~Ltk I. -L IU 1.-L L~ UI4.iIjL VL lIU I i

and packing plants for dates, processing plants for limes, As well as simpleUehydration plants fLor 'lucerne adI 1fJ s,k 4n ork'er tU o LJprodUUce LULceLrnek ImLeaI.L andU

fish meal should be examinied. It is possiblc tlhat such plants couldl open ulpnew anu reri-LunCeratLve export possiblilt'ies.

79. In view of' thLe li,,itations .1n the infrastructUre Lof tiiC siupporU 1-

services, the lack of information on the physical resources of the country,tLe non-availability of locaul expertise andU tLihie absence of reliab)le data on11

current crop acreages, production, etc., the desirability and possibility oftechnical and advisory assistance to Oman, perhaps by a small team internationaiin character, to assist the Government with the formulation of agriculturalinstitutions and policies should be considered. Sucn assistance should payparticular attention to the economic and social role which agriculture shouldplay in Oman's developmentL and Lto tLe needs for agricu Lural research, exte-l-sion and education, agricultural credit requirements, marketing and processing,(possibly on the basis of cooperatives), as weii as to the optimum developmentof the land and water resources of the country. The team should also beequipped to look into the possibilities or setting up seed and seediing pro-duction facilities and to evaluate the possible role of cooperatives, orother suitable organizations, in the future supply of agricultural inputs,particularly fertilizers and pesticides.

TRANiSPORT

80. The traditional economy placed little demand on the transport sys-tem. The bulk of marketed products had to move only short distances, perhaps20 kilometers, whiclh was within the range of conventional donkey and cameltransport. A few products were carried over longer distances and the flowis still small but likely to increase witlh economic expansion. Transport bydhow is common along the coast but no records are available. Some farms,primarily along the Batinah Coast, require diesel oil to fuel pump engines,and chemical fertilizer to supplement animal manures, but again no data areavailable on these commodity movements.

81. The transport requirements of the oil sector are largely self-contained within the operations of Petroleum Development (Oman) Limited, theconcessionaire. PD(O) operates its own port for imports of equipment andexports of oil, constructs and maintains its own access roads to the oilfields, contracts for its own internal air services and uses its own pipe-line to evacuate the crude oil from wells to port.

Roads and Road Transport

82. Because of Oman's dry climate, sparse vegetation and high strengthof the subsoils, it is possible to drive across country except in the moun-tainous regions, and it is estimated that more than 90 percent of the villagescan be reached with four-wheel drive vehicles. In general, therefore, theconstruction and maintenance of roads is not needed to provide access tomotorized transport. but more to reduce its costs and to improve service.

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Minahi al-i Fahal 80,000 "

R'Nay s u t 20=30,000 " to

All .o.ther portLs 2,0 " "

FA measure used Dy the port auLnoriLy representing meLric tons, orunits of 40 cu. ft. of cargo, whichever is the greater.

The great bulk of this traffic represents imports from abroad into Oman, withexports and coastal movements being of minor importance. About hair the im-ports at Mutrah-Muscat consist of sugar, flour, rice and cement, all bagged.in addition, most of Oman's imports of equipment (other than for PD(O)) usethis port. Minah al Fahal is for the exclusive use of PD(O) and handles notonly the equipment needed for exploration but also the supplies for PD(O)'slarge permanent establishment in Oman. Dhow traffic specializes in a fewbulk commodities such as cement, lumber and diesel fuel in drums, and isparticularly active in Sohar and Saham.

91. Oman does not have a regular merchant marine (Lloyds indicates onlyone 900 GRT motor vessel), but about 100 Omani dhows (many motorized) havebeen registered by the Omani customs. An order was issued recently to giveOmani dhows preference in the coastal traffic. We recommend that the capac-ity of the local dhow fleet be utilized fully before committing funds to amerchant marine fleet of larger vessels.

92. Since the start of the oil boom in 1967/68, there has been anenormous increase in imports. The import of dutiable goods alone (much ofPD(O)'s and contractors' equipment enter duty free and are not recorded inthe customs statistics) has gone up in value from about RS 3.5 million in1967 to about 13.8 million in 1971. The rapid increase put an inevitablestrain on very simple lighterage facilities in Muscat, making the importa-tion of goods both slow and expensive. Because of delays in unloading, linerconferences imposed a 15% surcharge on shipments to Muscat.

93. The situation at Muscat led the Government to retain consultingengineers to study a new port site, and in 1970 building commenced on im-proved lighterage facilities in Mutrah which are just now coming into opera-tion. Subsequently, the Government decided to accelerate construction ofa deep water port at the same site (Port Qaboos) which, in addition to thelighterage facilities, will initially have five deep water berths - morethan 30 feet depth - and three berths with about 15 feet depth at low tide.The capacity of the initial stage including lighterage facilities is estimatedat about 1 million tons per annum, at a cost of RS 20.3 million. A secondstage in the port construction would be dredging at an additional cost ofR-S 1.8 million to convert the three 15-feet berths to deep water berths,which together with the lighter berths would then provide a capacity ofaround 1.5 million tons per annum.

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94. 1Withouot ma1nr new oil finds the grnwth nf imnnrts-v intn Oman .x411probably not continue at the presenit highl rate; cargo has recently beenmovincg through thte nort at a rt-x-e Pneqivil ent- i-n nhrt,,f 2?50 ,0 tonns nper ann-but it is not likely to exceed double this volume within the next five years.Even with r-hp transfer of PD(O) traffic tt-n I-hp new nprt- Po-rt- QAhn is notlikely to be utilized to the full capacity of its first stage for some time.Therpfnrp- dreioina tn nrnvidp ths a fritFnnnl t-hri.oo ,t4on wntor 1-cirtl%appears unadvisable until such time as traffic growth has been established,and an economic tiling determined for the expansion. The importance of thecontribution of the lighterage facilities to the potential amount of cargohandled should not be+-- unersimated -in- sase-sing -ln f c 4f thport.

95. In May 1971, the Dutch Consultants NEDECO prepared a report ontAIhe rmanagem.ent, organization and operation of Port Qaboos. TIhe reo r.akesmany recommendations, not only on Qaboos, but on some broader problems aswell.. It+ proposes, inte alia the esabi,mn of a -°otAuh yopA %_O~ &A.L =J. CZ. ~ 0., 1;1 i -CaLJJ.L.L Z LILILCJL C L. L U ~ 11U L. L t'AU LLLU LI. L L Ut

Oman to manage and administer all port activities in the Sultanate. TherecoAmLU enLLdatLions havte -yet tL t L bLIe -a ct.ed upon L1 Uy 'LIh L e GovernLImentL T"lhe Port

Authority should be established promptly with a view to coordinating portoperations anA Investm'ent's throughout O,,an,--.. so tLa in tle wod of -- the-- IOC~ LO a.~ ~tlVC~ CLCI CI %.1. t/ I . 'kliILCLL, OtJ LLta L .LlA LILC WVU:A. VbIL Lill-

NEDECO report "public investment in port facilities is reflected in costTbenellCits to Ile -hole co,,anunl t-y'. Somne technical advice mi-ay be r.eed'ed inAJLCA k ~L CU LL~ WLLCJC I- IULLLL UIC LCAL1 L ~U iC id~U icuo i

setting up an appropriately staffed organization for a future Port Authority;its elforts woulAd nee-Cd to be concentraed '- the first,ntceonhefilJ_ %. L L V ~LU L1L L[ I LtU , lLL LL LL S L IllS LanLe , OnL Llle EaChl-ities at Qaboos.

Aviation

96. The same conditions of climate and subsoil which make much ofOman directly accessible to motorized vehicles also provide numerous naturallanding places for liglht aircraft. Primitive airstrips are available in allparts of the country including a few in otherwise inaccessible points in themountains. As in the case of roads, the most important issue therefore isnot to extend air services to points not previously touched by them, but tolower the cost and enhance the quality of these services. Present installa-tions are generally no more than some stones marking the runway, a windsockand perhaps fuel drums with hand pumps ard fire extinguishers. There are noprovisions for instrument flying, and there is considerable risk of damageto aircraft from loose debris on the runways. Domestic airfields in Oman areat present under the jurisdiction of the military authorities or (PD(O). Apost of Director of Civil Aviation has recently been established but itsprimary responsibility appears to be restricted at present to operating thenewq international airport at Mezoon near Mlutrah.

97. Only a few of the airfields in Oman are served by regular flightsand none of these are fully available to the public. The Sultan of Oman'sAir Force (SOAF) operates scheduled services based on Bait al Falaj (justoutside Mutrah) to eight points listed in Table 8.7. Civilians are carriedfree of charge on these flights to the extent military requirements do not

- 29 -

,)reomo)t snacc. PD(O) contracts with Culf Aviation (aii affiliate of BOACbased in Salarein) to provide for its owni personnel services based on an air-fieldl at Azaiba (near PD(O)'s main base at Minah al Fahal) to thirteen pointsin the interior of Oman which are important in oil operations (Table S.7).

9'. No data are available on passengers or tonnages floxwn by eitherof the two operators. The niilitary flights do serve many important ponula-tioii ceniters andl to some extent substitute for a civilian carrier; space onits flights betweeni Salalah and MTutrah is always filled by a long waitinglist of civilians. PD(O) services, on the other hand, go to places in Omanwhich, except for Ilri, have no general economic significance and there islittle likelihood that they would attract non-PD(O) passengers if the offerwere mizde. Pn(O) flights. unlil;e the military servires;- woiiud therefore notIe a proper hasis for a common carrier operation and would always remain inthe nature of a contract business.

99* Desnirto obvious 1TrPertainties ahou,t the future rnle of internal

air transport in Oman, there appears to be no immediate need to establishnew scheuiil.ed donmestici air seruirve The existing military flights can

cover any important public and emergency needs until a study is made of truedemnand annd a deo~c4ion ic reachedA on theaprorit requ-rements,4 lf ar.,

for internal civil aviation. The need for more study and detailed economicanalysis recommends against the Government's embarking at this time on newimprovements to Oman's internal aircraft landing facilities based on publicnncsenor- denmand occsnum no- th - -n r-r---nenA 4 -rnovmnntcs wu...1A n4 1h,

,!holly justified on the basis of military traffic alone. The Governmientsiould attem.pt to quantify its r.ilitary and nonmil.littary air traffic re-quirements separately to assure that the economic analysis is made correctly.

100. International air services are at present being operated from Baital Fala4 by Gulf Aviation (in which' Oman has an 18 percent sliare ownership)and to a limited extent by the military authorities, while (PD(O) contractswith Gulf Aviation for services from i's lase at Azaib1a to ne-igliboin coun-r1V ~ 1. ISl tlLkV£5 L Ui J L) a~ L fLd~ LU L ~~I UUL.LLug L:UU[

tries in the Arabian Gulf) 1/. The existing field at Bait al Falaj has onlya l ,8O0d .n. runway, is surrounded by mountains and has no facilities for nightflying. It is therefore being abandoned in favor of an entirely new airportat ;eo on on thle coastal plain nort.-w--est of -1 4u-trah...

10l. Th e new 4nternational airport cost'ng a-out; 4. miiJon wi'thI . tflU~LL~W J.ILi aLOL.LAJLOL d± L .bLig~UULIC' u ILuIOL W1L[

consulting services, absorbs by far the greatest amount of the Government'souLays oLL aV.LiaLUiL. LL W.L cl.U aloe of Limportance Lo comestic aviation,since all the military and PD(O) fliglits originating in the Mutrah area will

1/ There may be some international air travel initiating from the north-western parts Of Oman tnrough the modern airports in neighboring AbuDhabi and Dubai, but we have no information on the importance of thistrar r ic.

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be relocated to it. The main runway at Mezoon is already completed and com-mercial use of the field will begin in 1972. The whole facility is to be

completed towards the end or i93. No decisions have vet been made aboutlanding fees or other user charges but it is unlikely that they would coverthe full costs of operation. As Mezoon will start out withi considerableexcess capacity, the authorities may be tempted to set prices at unduly lowlevels. 1iowever, careful investigation should first be made to determinecosts and to assess the elasticity, if any, of air traffic to user charges.

102. The recently created post of Director of Civil Aviation will be

filled by an Omani now receiving training abroad. Hiis principal task willbe operating TNezoon Airport, in which he will be assisted by a U.K. consult-ing firm, international Air Radio Ltd., who are under contract for rive vearsto provide technical expertise in operations and maintenance, and in tiletraining of Omani personnel. The Government shouid consider graduaily vest-ing othier civil aviation functions in this Directorate, including the assess-ment of internal demand, the licensing of internal air services, and the

operation of internal civil airfields. As a basis for such additional re-sponsibilities, the Government should first have studies carried out andrecommendations prepared on the following topics:

(a) the demand for internal air services;

(b) the possibility and desirability of separating military andcivil aviation functions; and

(c) the policy of the Government as a shareholder in respect ofthe services to be provided by Gulf Aviation in Oman.

Transport Management and Operation

103. It will be several years at least before more stable pattcrns ofcommodity and passenger movement become established. For this reason, thetrends in Oman's transport sector, and thus the areas where further large-scale transport investments should be made are not yet clear. On the con-trary, with certain bottlenecks now being remedied, it seems evident thatfor the next few years Oman should not embark on major new transport invest-ment, but instead devote its resources to consolidating the institutionalframework for management and operation of the transport sector, particularlyin road maintenance. The principles of staged construction should be followed

for any transport project embarked upon in the future. The stages of suchprojects should be justified economically within a relatively short life(say 7-10 years), and should be flexible enough in design to be adapted toa more permanent future solution as development and transport patternsmaterialize.

104. If it is accepted that for the next two to three years Omani shouldnot undertake new construction projects in the transport sector, only alimited number of such works will actually be under way in this period. Thenuestion is posed as to who should be responsible for their execution. At

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present, most major civil onrks n irndeir the c-nntrnl nf the Planning and

Development Department. The G2vernment views this as an interim arrangementtwh4;h det-Acrt- From thot Deonn-tr-onr I' Qi onnfne, F-,nrt-4n nnA hoc hc.fno. 4tt

a recommendation that the construction and maintenance of all public worksin the Sultanate be entrusted OF onevernmentl agenc y of ----n.. Thsapr.h

seems realistic in view of the small size of Oman and the relatively modestvolur..e of public construct.on in the variouL subsectors of iLtL-s economy;however, in order to provide for better coordination of transport, all func-tions related to t h e plIaLL1ng, lnvestIent, L-LL-L I UL tLIU ImaagI aL.diL 0IIac . LLiLth

transport sector should be vested in the same Ministry, which in view of itsother puDlic functions, might be called the Ministry of Transport and PublicWorks.

105. Some technical assistance may be required in setting up the newMinistry, particularly in the fields of transport pianning, pubiic worksmanagement and maintenance. The principal issues to be considered immedi-ately in the transport planning field are to:

(a) assess developments in the sector as a whole and makesure that adequate data are collected for this purpose;

(b) assess the budgetary implications of the Government'soperations in the transport sector as a whole and adviseon user charge policies;

(c) assess the role of the defence services in Oman's transportsystem;

(d) oversee the preparation of an economic review of major con-struction projects now proposed for the transport sectorbut not yet under way; and

(e) prepare recommendations for management and planning ofOman's transport sector on a permanent basis, includingthe preparation of a continuous roll-over, say 5-yearDevelopment Plan, based upon sound economic criteria.

POWER

106. The main source of publicly consumed electricity is the Oman Govern-ment Power Corporation's (OGPC) diesel power station at Riyam, between Mutrahand rMuscat which serves both cities. There is another government owned powerstation at Salalah and some smaller units for army, police depots and othergovernment stations in the country. In addition, there are several privateunits, the biggest of these being owned by PD(O) at Fahud well-head installa-tions and the oil port outlet at Mina Al-Fahal. Oman's crude oil possessesproperties which make it suitable for direct use in diesel generators as isdone at Mina Al-Fahal, and natural gas is used in gas turbines by PD(O) at thewell-heads at Fahud. All electric power generation in the government sectoris by diesel engines using imported refined oil.

107. Public supplies of electricity in the capital area originated in1948 in Muscat from a municipal -lant, and a private undertaking in Mutra1hwhich commended operations in 1962. The British based Muscat Power CompanyTLimitedt tt oe te ,,ncop ,-er m-.tnt4on -a agnrd stanr-t tr build n-hd p,e.en- ttto

in Riyam when the Sultan granted it a concession for Mutrah/Muscat and Ruwiin Tuly 1967. The company,, w.a 1.n.nhe out byt- the G-ove nirnnment- in Decembez 1970

since when it has operated under the name of the Oman Government Power Corpora-tion (OGPC) Thle Corporation has retained Balfour Be-att &- CoJpany asn

neers, contract managers and supervisors of construction, as well as formanagement a dvi sory services. Public power supplies 'all under the aegis ofthe Department of Planning and Development.

108. The present legal status of OGPC is not entirely satisfactory andthe poVw-er or'U'LnanLce unluer WhLich it operates is inadequate. LUowever, thLe CO1-

pany gives the impression of being efficiently operated and maintained and,ai Ler soliUe siitialS 'Loss xLn the formation perL.I LUU, LII 1-L - Uy:LdLc: U IL d prou I L .Because of an exceptional growth of consumer demand, it will need increasingamouits Or outsiLdUe f'nan£ciLaL assiLstance to Udea.L with the expar,s[oLUn o'L itsfacilities. Furthermore, while it has so far been able to achieve a satis-lactory rate of' returL wtitL the present flat rate tariff of 24 baizas perKWH (reduced from 26.5 baizas in October 1971), this tariff is quite unsuit-able ULo utu rUe. oUmLUrsL such at L;:e new For QabLoW L Uk Y Le aLHrportLat ezoL o- I

or for possible industrial uses in the future.

109. After the events of 1970, consumer demand for power in the capitalarea rose at a pheromenal rate. The short-term strategy to cope with thisdemand has been the installation of additional diesel units and a program ofcontinuous expansion of transmission lines. To tnat end, instailed piant atRiyam, which totaled 3.0 megawatts at December 1971, was increased to 5.0megawatts in February i1I7, and a further 2.9 megawatts is scheduied to becomeoperational in June 1972. These additions, together with a high tensiontransmission line being built to Mezoon, have cost the Corporation aboutRS 600,000 to date and with the further addition of a 4.9 megawatt unit ex-pected to be commissioned in October/November 1972, at a cost ot RS 409,000,should meet demand through 1973. A letter of intent has been issued for asecond 4.9 megawatt facility estimated to cost RS 370,000, to replace anexisting 600 KW unit. A transmission line to Greater Mutrah with an esti-mated cost of RS 164,000 will complete the major works necessary to meetdemand to 1974. Additional investments in the same period for such purposesas staff housing and distribution are contemplated. In Salalah, developmentshave necessitated an expansion in installed capacity from 0.9 megawatts to2.3 megawatts and further extensions are contemplated, but the prospects fordevelopment in that area are at present unclear.

110. The authorities are now reviewing their objectives for the powersector. Some basis has been provided by two consultant studies which, how-ever, were short term oriented. A third study presumes full national elec-trification by 1985, and bases its demand assessment on questionable compari-sons with certain Gulf States. The authorities are therefore making arrange-ments for an appropriate feasibility study to identify the least cost alterna-tive for meeting the growth of demand from 1974 onwards. Since any power

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nroiect in Oman will inevitably contain a high foreign exchange component,

it may qualify for international financing.

EDUCATION

111. It is estimated that there were about 58 primary schools (grades1-6) in O.man in 1969; SO nf them were Koranir, 3 secular; and 5 nrivate(Table 8.8). A trade school was built in 1969 to help meet the needs ofthe 041 4nA,,ot-v? *nIrollment was less than 1,000 in the three sprilar

schools. In July 1970 radical reforms and policy changes for modernizationand developmnt werae *nnnced; oedcatin r asn in theoryr mnrq nyni,n 1 hlea tnall. Schools quickly became a symbol of social development and concern forthLie peop'Le. Schooling becm.e a postS-414..y, without regard to age, andOman faced a tremendous social demand for schools. In 1970 there were 16secu'Lar sci;ools, al.l primary, wth a sotudent population of about 7,00. 0 and96 teachers. By March 1972, when the first reliable sclhool statistics werecompiledu, the numbuer of. schtoo'ls had iLncreased" to 45, the enro'llment to15,800 and the teachers to 443. Of the 15,800 students, 66 percent were ingrade 1, some 21 percent in grade 2 and only 13 percent were distributedover grades 3-6.

112. This expansion has necessitated the operation of sclhools in poorlyequipped physical facilities such as tents, private nomes, rented buildings,thatch structures; only a few relatively modern school buildings exist. Thesituation is improving with about 26 new schools under construction andseven more at the stage of design. The Ministry of Education intends toincrease further the number ot new school buildings but budget constraintsare beginning to inhibit expansion plans.

113. There is no teaclher training scheme in the country and those teach-ing in Oman are either Omanis trained abroad or expatriates. Only a fewteaclhers have even minimum qualifications. Of the 443 teachers currently(April 1972) in service, about 110 have had less than 6 years of schooling,100 have had 6-9 years and some 190 between 9-12 years. Furthermore, their

education is mostly classical and religion based. With increased enroilment,the qualified teacher force will be further diluted. The number of qualifiedstudents available for training will be a serious constraint on the supply otteachers for a considerable period. It is estimated that about 100 teachercandidates per annum will be available. The number of reasonably well pre-pared teachers, Omani and expatriate, will largely determine further expan-sion and improvement of the education system.

114. Oman has no capacity to produce its own textbooks and teaching aids,and there is no plan to develop an Omani curriculum in the short run. Thecurriculum is dictated by available textbooks, which are currently providedby Qatar, but which will from 1972/73 be provided by Kuwait. It is doubtfulif more than half of the pupils are provided with necessary textbooks andwriting materials. The blackboard is ordinarily the only teaching aid avail-able in the classroom. The subjects taught are Arabic, arithmetic and reli-gion in the first grade; mathematics, science, history, geography, art and

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Arabic are offered inf the higher grades. Some girls' schools teach sewing

and the Ministry would like to add home economics to these schools.

115. Skill training is offered in only one formal setting, the Oman

Technical and Traue School. Lt Ias a capacity of about 10 students but,

because of the lack of qualified candidates, at present enrolls only 54

students in a three-year course (Grades 7-9) taught by 1H teachers. Since

its establishment in 1969, the school has graduated 11 of whom 7 are in jobs

directly related to tlheir training. The school of'ers training in electri-

citv, bench fitting, machiine shop work, auto-diesel repair and welding; its

standards folloxw tiiose of the London City and Guilus examinations. It i5

expanding to include building trades, facilities for which will be ready in

October 1972. Skill training is also received on-the-job, irn smnall tradi-

tionial craft shops.

116. The armed forces offer literacy and skill courses to young trainees

at thiree levels. The first level, for all recruits, is designed to provide

functional literacy; thie next level aims primarily at improving literacy

skills for about one-third of the trainees and the tnird level raises one-quarter of the recruits to an advanced level in a variety of academic subject-

and provides skill training in electronics, construction and mechanics. At

present 35 qualified teachers are employed for these programs, 9 of them

expatriates. It appears that the defense forces will be a major source

of skilled manpower for the near future. Trainees, on completion of 5-7 years

army duty, will be well equipped to help combat illiteracy, operate mobile

training units and fill some skill gaps.

117. Beginning with the 1972-73 sclhool year, the educational structure

will be changed from 6+3+3, as originally planned, to 4+4+4, largely to align

Oman's system,i with that of Kuwait, which is replacing Qatar as the source of

textbooks for Oman. Primary education will be of four years duration for

ages 6-9, though age reqjuirements will be flexible. Intermediate education

will offer a four-year course, followed by four years of secondary education.

For the foreseeable future, hiigher education courses will be taken abroad.

The curriculum of intermediate and secondary education lhave not yet been

developed.

118. The 4+4+4 system offers considerable flexibility. The four-year

primary cycle will substantially meet social demands at reasonable cost but

will be insufficient to provide lasting literacv unless provision is made for

subsequent out-of-sclhool reading. Intermediate education will he terminal

for the majority of the students and will provide some proficiency in essen-

tial skills. Comprehensive secondary education will be available to relative-

ly few and will be geared to the middle-level manpower needs of industry,

commerce, agriculture and public administration. IMobile units, radio educa-

tinn, and facilities for out-of-school youth will add an important dimension

to Government efforts to meet the needs of the rural conmunity.

119. Primary education is provided free and the same policy is likely

to be follow,ed . in intprmedinte and secondarv schools when such schools have

been established.

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120. In auantitative terms, educational development in the short neriodsince 1970 has been impressive but continued expansion is unlikely withouterosion of quality and budgetary expenditures out of pronortion to rPesu1ts

Unless a strategy is developed and plans are carefully drafted, serious im-halanres and crucial gans in education will nccurr

121. No nart nf the edtrationnal svtem ic without problems: (a) educa-

tional goals and policy are unclear and no procedures or organizational unitsexist tn foyrmutlate pnnlirv (h) t1he Ministry of Education is not properly or-ganized nor staffed to carry out long range planning; indeed, it is hardpressed to cope with day-to-day nrnholmnc (c) statistics are not a-ailable

and no scheme exists for compiling them on a continuing basis; (d) there isno national curricullum (a) ta,-cherc ar largely - 14if4e A -A plans

exist for either in-service or pre-service training; (f) building standardsvary wvidely; ne-, . -c-ols y --par to. be .-ell bu1il zlt they are dei.ientin ventilation, lighting and sanitation; (g) plans for training middle levelmanpo;ver in agriculture, inAustry and comm.Iuerce a inauate.

1.evelop.,ent of a sound eAucatUorLal strategy should be a long-termexercise, basically by Omanis. However, they want and will need for an ex-tended period expatriate assistance in educational pianning, and tney haveapproached UNESCO in this matter. Whatever the source of advisory assistance,it must be particularly innovative. in view of the newness of educationaldevelopment in Oman, opportunity exists for the development of a system thatcan avoid the deficiencies and mistakes met in other countries. The need,therefore, is to plan a delivery system uniquely suited to Oman's economicand social conditions. Resources are limited; hence, wastage is intolerable.

124. Pending the development of a long-term educational strategy, thegovernment's efforts should be directed toward certain broad objectives.They are:

(a) to broaden the opportunity for education, particularly atthe primary level;

(b) to equalize educational opportunity between rural and urbanareas;

(c) to relate the education and training system to the manpowerrequirements of the country;

(d) to provide adults and out-of-school youth with functionalliteracy, skills and knowledge that will enable them toparticipate more effectively in national life; and

(e) to minimize costs by creating an efficient system.

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HEAL Th

125. In ",man's 4solated environment, there is no general awareness of

modern hygiene or simple precautions against disease, for example, the boil-ing of: water. 'Pie condition ofp sh-ops and' r,,ar'-et places, ob-vlously ve~JL 0~J * IIL L.JLU.L L JAL &U LLJJ fLU II L KL.jLd e, UU UL .L LV C

ready contamination of food. Mutrah-Mluscat, on largely rocky, non-poroussoil, duoes not ilave a sewerage system. Facilities LEor Unou[ern uLsease pre-vention measures are restricted, and there is still great reliance on "home"ret-1e'U'es. LnLectious anu' parasitic diseases including malaria, tuberculosis,trachoma and dysentery, as well as malnutrition, are said to be common.Decause of water contamination, a ciholera epedemic occurred in 1971. Whiiststatistics are absent or unreliable, a figure of 70 percent is quoted forinfant deathi in the first year, due partly to traditional practices ofmid-wifery. For manv years, the only medical services in Omani were providedDy American Mlission hospitals ana a charity nospital, all in Etle capiLal arca.Commencing in the late 1950's, nine lhealtlh centers were establislhed in ruralareas, starred iargely by expatriats and with very limited faciiities. Inlsuch circumstances, a strong popular demand for modern lhealthi facilities evolved,resulting in a "crash program" of hospital and health clinic construction.The Al-Nahdba Hospital in Ruwi was opened in February 1972.

126. Large on-going projects include: a maternity hospital in thecapital (RS 250,000), and a plan for six hospital/sclhool complexes, thehospital component of which may cost some RS 2.8 million. Another hospitalis on-going at Tantam (RS 498,000), twenty dispenseries in rural areas andfive lhealth centers, (respectively RS 290,000 and RS 925,000), and threeadditional health service centers in Ras Musundam (RS 167,000) and buildingsfor staff and stores. Onman has no general referral hospital but one is con-templated, perhaps in Ruwi, to serve the entire Sultanate (RS 4 million).These health facilities will have to be largely staffed withi expatriates,implying a high operating cost.

DOMESTIC W.TATER SUPPLY

127. Wlith ti-he exception of Muscat-ltutrah there are no large scale pipedwater supplies. Such supplies in the capital area originate from wells inSib. These have grow,n from three in number in 1968, to eight in all, with atotal pumping capacity of 700,000 gallons a day, compared to existing averageconsumption at over 400,000 gallons a day. This supply could be augmentedimmediately by additional pumps, but the effect on water reserves is atpresent unknown.

128. The system is operated and maintained by the Water Board, anautonomous body; it will also operate a water distribution scheme to becompleted this year. The 'Water Board is hoping to raise the rate to thepublic sector from one biaza a gallon to the two biazas a gallon chiarged tothe private sector. As the public sector uses some 75 percent of total con-suinption, this plus the RS 25 charged for the present 6-10 connections nerday, should give the Water Board an operating surplus.

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129. The Water Board nresentlv does not finance investments from itsoun budget. It is establishing nex; facilities to increase pumping, but hopesto incrrPsP its supplies ten-fold by 1975 with new wells and nossibly A radnm

to accomimodate demand in H4uscat-Mutrah, Greater Mutrah, and 21ezoon Airport.It also reuiiresn n rnnor filtration n pur_fying system; the need forpotable water for purely health purposes is urgent. Present hopes are thattheA gophyrsixtcarl ~4n-tavsTootirn bINng rlnne bTy So-e T.T4 Ilson- Kirptri;ck, I.Tl1

demonstrate that increased supplies at Sib are feasible. If so, the newinvestmLent wI-,4chL Will -include a thirty-m.ile -,,aLi pipe plus pu.,ping statin Us

could cost over RS 4 million, whiclh might be eligible for external financing.ITh ere areAdoub'ts about the compreh-ensiveness of the present investigations,J. tL h Unee fo aL. U c %_11 resouc A Lsurvey L. L -L.illd.

and the need for a country-wide water resource survey remains unfulfilled.

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IV. DEVELOPMENT STRATEGY AND PROSPECTS

130. It is cleat from foregoing sections of this report that Oman hias

good development potential. Although much of the country is arid and dis-

tances are great, there are long established urban and agricultural settle-

ments in the three main regions where favorable water conditions exist.

Early increases in the productivity of traditional crops could be achieved

tlhrough the increased use of inputs, while in the longer run increases in

Droduction could be expected both from new crops and new lands wlhich couldl

be put under cultivation. Development of this agricultural potential would

benefit tde rural population which is still large. Similarly, good poten-

tial for fisheries probably exists, altlhoughl the extent will tnot be known

until the proposed fisheries survey is complete.

131. At the samle time, oil revetnues make steps towards realization of

this potential irmmediately possible. hlowever, on a long-run view these re-

venues must be regarded as temporary. While it is possible that important

new oil discoveries might be made - exploration is continuing - these cannot

provide a permanent long run base.

132. Although there is no accurate information regarding the size or

demographic characteristics of the population, it can safely be assumed

that its rate of growth will increase with the spread of health services.

133= Taken together. the existence of relativelv good natural resources

outside the oil sector, the prospect of accelerating ponulation increase and

the prudence of assuming for the present that oil revenues may disappear in

about a generation dictate the appropriate overall development strategy,

namely, to devote a substantial part of oil revenues, while they exist, to

tthe development of thie non-oil sectors. This strategy of "ploughing back

the oil", could aciiive two obiectives. In the short and medium run, it

could diffuse benefits from oil income through the population, and in the

longer run could ensure thlat the economy remains viable even if oil revenues,

which are wlholly in foreign exchange, disappear. This, in turn, indicates,

as a sub-strateoy, that a considerable part of the growth of output shiould

be export oriented, since for a long time the capital costs of investment

will' have a h4n¾ foreign exchange content, as will the current costs of

operating and maintaining development facilities; in 1972 public investment

had1 a.'t_ 7_5% foreign nxchangen content. New discoveries of oil in commercial

quantities, should they occur, might seem to lessen the urgency of needed

policy decisions, but would not in fact warrant change of this long-range

strategy, since ultimately oil is a depleting, non-renewable, resource. More-

over, any new oil dscoveries w,ould probably also denlete iin about a aeneration.

134. WhIile this overall strategy bnradla J ind nAate a directlon for Oman's

development effort, it does not by itself determine the content and phasinig of

that effort, whiich must takle into account tthe present and future endow..ment of

real and financial resources; that is, present and prospective constraints

(lack of resources) must be recognized. Some can readily be iderntified from

the experience of the past two years.

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13v.Irl Te first, and -n the short term..ost pressing, is a '-,I, of knowledgein almost every sector of the Omani economy, without which action is blind.

Previous sectiLons olf this report Inave stLresseA the gaps hilch exist here, and

identified many of them. The need ranges from a population census to the gather-

ing and presentation of current statjstics, and includes such things as surveys

of water resources and uses, initially in the presently populated rural areas.

136. The second is the lack of an institutional framework geared to eco-

nomic development. This is not only a matter of government organization and

administration, about wlhich some suggestions are made elsewhere in this re-

port, but also of a legal infrastructure of explicit, written, legal codes,

so that the private sector does not feel it is at the hazard of complicated

customary law or the caprice of government bureaucracy.

137. The third constraint, which on a short view perhaps seems more

urgent or obvious than the previous two, is the lack of skilled manpower as

Oman seeks to modernize her economy. Skills can, of course, be imported,

either directly by the employment of expatriates in such areas as public

administration, education and health, or indirectly by permitting construc-

tion contractors to bring in their own labor force. Oman is in fact re-

sorting to both these methods. But continued reliance on the services of

expatriates cannot be regarded as a pertnanent solution. Not only are such

services expensive but the presence of expatriates in relatively highly

paid positions creates internal frictions and resentment. There is thus a

clear need for general and vocational education as well as for "on-the-job"

training both for its own sake and as a development requirement.

138. These three non-financial constraints - the state of knowledge, the

capacity of institutions and the availability of skills - taken together de-

termine not only the content of an effective development effort but also its

feasible scale and pace from time to time - that is, Oman's absorptive capac-

ity for change and growth. The response of Oman's domestic economy to the

recent rapid increase of public expenditures clearly indicates that her ab-

sorptive capacity is already under severe strain.

139. One important dimension of the development effort is the level of

investment in infrastructure, such as roads, electric power, schools and

hospital buildings, etc., of which no country, developed or developing, ever

has "enough". In this sense, the state of physical infrastructure is always

and everywhere a changing constraint towards which many development plans,

implicit or explicit, are mainly directed. Since mid-1970, Oman has started

some maior investments in infrastructure, as described earlier in this report.

At the same time, it has been pointed out in some previous sections of this

report that there has as yet been insufficient attention given to their sub-

sequent operation and maintenance and that it would be premature to undertake

laree new investments, particularly in the transport field, until some ground-

work has been laid towards improving knowledge and strengthening institutions.

140. The level of fruitful future investment in infrastructure, and in-

deed of all spending for development; will denend not only on those real

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factors influencing absorptive capacity which have been identified in pre-

vious paragraphs, but also on the availability of financial resources. Thus

Oman's basic development strategy and tactics require a matclhing financial

strategy and tactics. Again, the starting point is the ultimate loss of

oil revenues, which, from the nature of the resource from which they arise,

cannot be permanent. This argues the need for establishing a tax base and

a tax system to provide alternative fiscal revenues to the public sector.

While suchi action is not urgent, since oil revenues are of course not ex-

pected to disappear overnight, the problem will loom more threateningly as

the years pass. It must be borne in mind that oil revenues are wholly in

foreign exchange, while alternative fiscal revenues will be mainly in local

currency.

141. In turn, financial strategy shiould recognize that a future need

will arise for long-term foreign exchange borrowing in support of developmenat.

This being so, Oman's external borrowing capacity should be used sparingly

in the medium term to conserve her creditwortlhiness for the longer run future.

In the meantime, it seems advisable that external borrowing should be resorted

to only in cases where the lender can provide useful teclhnical assistance for

a sector or a project, in addition to finance as such.

142. It is not too early for Oman to begin assessing probable future fi-

nancial availabilities, on the one hand, and the scale and timing of develop-

ment spending, on the other. The evidence for this is contained in the 1972

budget which foresees an overall deficit amounting to almost 43% of current

budget revenues; in 1970 the actual surplus was 69% of revenues; it is in-

teresting to consider why this swing occurred.

143. In 1972 current revenues are expected to increase by Rs 3.8 mil-

lion, or 7.6% over 1971. The growth of budgeted civil current expenditures

is modest (about lhalf the increase in current revenues), while defense ex-

penditures are expected to increase by Rs 12.8 million, or 77%. Nevertlie-

less, the current surplus or fiscal public savings (after deduction of all

defense expenditures) are expected to amount to Rs 13 million in 1972, or

24% of this year's current revenues, compared with almost Rs 24 million

the previous year. Despite the sizeable 1972 current surplus, an overall

deficit emerges because development expenditures are budgeted to be Rs 36.3

million, 777 higher than in 1971, due to contractual pavments which must be

met for work already in progress on major projects.

144. Thus the 1972 budget was, in a sense, forced into deficit because

of obligations entered lnto earlier without apparent consideration of their

future fiscal consequences. To some extent, the marked increase in defense

expenditures arises from the same causes; canital expenditures for defense

(charged to the current budget) are expected to increase by 109% in 1972 to

rmeet the costs of military works and equipment alreadv contracted for. The

general conclusion to be drawn is that starting projects in the public sec-

tor without aggregating not only their total costs but also the annual pay-

ments require(1 for their completion can be fiscally dangerous. Chlronic

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fiscal deficits would in Oman's case quickly lead to persistent balance ofpayments difficulties, which in turn would impair creditworthiness forlong-term external borrowing. It should be emphasized that this is trueirrespective of the level of revenues.

145. In an attempt to look beyond 1972, an inventory was made of on-goingdevelopment projects and of proposed development projects now being consideredby government departments, together with an annual phasing through 1977 ofthe capital and current expenditures they would call for (Tables 5.5 and 5.6).While probably not accurate in detail, and without claiming to be completelycomprehensive in coverages, the orders of magnitude are illuminating. Capitalexpenditures on projects which were on-going in March, 1972 will declinerapidly after 1972, while new current expenditures for their operation andmaintenance will increase; at the same time, there are very few proposedprojects in the pipeline. The inventory shows capital expenditures on devel-opment proijects now on-going, plus those now envisaged, falling to Rs 7.4million in 1975, compared with expected capital expenditures for inventorieddevelopment proiects of Rs 25.5 million in 1972. This, of course, is notpossible; government development expenditures will certainly not decline byanvthin2 like that amount. Many new prolects will be proposed and someinitiated between now and 1975. Oman's experience strongly argues againststarting any of these on a piecemeal "crash" basis.

146. Tn fact. exnerience to date shows a clear need for more knowledge be-fore public investment in any large new projects is approved.

147. It is suggested that the starting point should be perspective bud-geting or simplp financial Dlanning. On this approach, the financial re-sources likely to be available for development expenditures for each of thenext (say) five years would hp estimated; these would be mainly estimatedcurrent budgetary surpluses (after allowing for new current expenditures forthe operating and maintenance costs nf post-1970 nrniacte as they are com-

pleted), but might also include some external borrowing. Simultaneously, De--artm.ents and Aognries submitting nroiects for annroval by the central author-

ities should be required to provide realistic estimates of the annual phasingof capital costs, not J4ust total cost. Thia rplativplv simple exercise wouldalmost certainly show that total proposals exceed financial availabilities,and that SOme pro,ects mut be rephhae o natnnned tn avoid the hudgetary

situation which has arisen in 1972, leading to a need to select between proj-ects.

aS. VLJ ec., ve -e p , _ _ inna _ _

about eachi individual "candidate" project. This requires a scrutiny en-quirin. wh&ether .the pro-osed pro4e-t - A r. would achieve the envisaged re-

sults at least cost, in real as well as financial terms, and an evaluationof th'e econor.,lc andu social bDenefits of each. pro4ect ir. relation to- its cost.With this information, selection should be guided by the priorities implicitin thle basic developrent strategy andA the availability of real as well asfinancial recources. It may, for example, become desirable to begin parallelperspective budget'Lng of skilled manpower as well as of finance.

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149. Com.prehenc4iv maro-erononmic planning, for which a basis does not

exist, is not being suggested. The suggestion is the need to consider to-

morrow's consequences of todav's decisions. individually and in aggreRate,

within a simple framework which can be constructed "from the ground up".

Prospects

150. The immediate prospect is for a large fiscal deficit in 1972, in-

ducing a ballance of pay-ents deficit and 10s8 of exchanae reserves, and con-

tinuation if not aggravation of strains upon Oman's absorptive capacity,

evidenced by rises of prices, wages and rents. As has been said. this essen-

tially results from existing contractual commitments for some large develop-

ment projects, plus enlarged m.litary capital exnpnditiirpas This nattern may

recur in 1973, and even in later years, depending upon how soon decisions re-

garding public expenditures are related to real and financnial resource

151. Oman's development potential is good but longer-range prospects are

still indeterminate, since they depend on actions to be taken, mainly by the

omani Government. Oil revenues will probably increase, perhaps by 25% to 30%

over the next five years and, despite fiscal performance in 1972, there need

not be a persistent financial resource gap. Provided militarv expenditiure5

are contained, current budgetary surpluses could run at something like RS 25

million annually, wh'ch 's also probably about Oman's absorptive capacity for

development well conceived and beneficial expenditures for the time being.

A UNThMV

Page 1

NATIOLNAL ACCO'UNTS

Introduction

152. Statistics in Oman are generally fragmentary, deficient and un-reliable, and neither the Government nor any agency outside the Governmentis engaged in producing national accounts on a regular basis. Some rathersketchy statistical estimates are available for the period 1967-1971 and,when combined with information received from P.D.(O), present only a roughpicture of the magnitudes needed for basic National Accounts aggregrates.

153. On the basis of these pieces of information and various economicindicators, the mission has attempted to approximate the most important macro-economic magnitudes for the years 1967-1971. The following summary tableswere prepared: (1) industrial origin of gross domestic product; (2) re-sources and uses of gross domestic product; (3) gross domestic investment.Clearly the mission had neither the time nor the information to make accurateestimates. Many of the assumptions are of an arbitrary nature and the re-sults may be subject to considerable error. In spite of these seriouslimitations, it is felt that the results do help in obtaining a picture ofeconomic trends for the period of five years (1967-1971) for which estimateshave been attempted. And it is hoped that the following technical notes willfacilitate improvement of the necessary data.

I. Industrial Origin of GDP at Market Prices

154. The distribution of the GDP at market prices in 1971 gives a roughidea of the relative importance and contribution of the various branches inthe overall total. Although the data for the year 1971 are the most reliable,the contribution of some branches to GDP may still be considerably over orunderstated for that year.

1. Agriculture, fishing 11.62. Mining (oil) 64.93. Manufacturing 0.24. Construction 14.65. Transport, communication 0.76. Electricity 0.17. Wholesale and retail trade 1.88. Banking 0.69. Ownership of dwellings 1.4

10. Public administration and defense 2.811. Services 1.2

ANNEXPage 2

A. Agriculture and Fishing

155. This sector has been divided in three sub-sectors, namely (1)crops, (2) 1lves'tock and (3) fishino

156. crops - For the valuation of major and minnor crops at current pricesthe official estimates of production for the year 1971 as issued by theDekartm-nt of Ariculture have been ,,ed as benchmark. The current nricesare defined here as the wholesale or retail prices ruling in important ruralmarkets dur4ng the harvesting period. These nrices are collected or esti-

mated by the Department of Agriculture through the various agricultural ex-tension stations. Agricultural produce retained by the farmers for their

own requirements was valued the same way.

157. In all cases, data on crop pricing do not provide any informationon the varieties of a given crop, as is the case wi-th dates. Although pricedifferentials for various varieties of dates and limes are substantial, itwas not posslble to calculate separate figuzes for value of output of thedifferent varieties.

158. To obtain gross value added by crops, the value of inputs such asseedus, J'ert'il'Szers, inrsectiLcid'es, chemicals for zeriall sprayir.g, oil for

water pumps, etc. was subtracted from the total value of output.

159. According to the Department of Agriculture estimates of harvestedarea nave remained constant over the period 1967-1971. The yield per acrefor the five years was calculated by projecting the estimates of 1971 back-ward for each agricultural product independently, using the trends that thLeDepartment of Agriculture has made available.

160. Livestock - Value added in the livestock sub-sector covers thelivestock products such as meat, eggs, milk, wool, hides and skins. Dataon livestock products were obtained from the Department of Agriculture.For the purposes of valuation, the average annual wholesale prices are re-duced by 10 percent to get producers prices. 1/ In most cases only a fewprice quotations were available which make it very difficult to know theactual movements in the prices of the products. In the absence of relevantdata, it was assumed that we could project backward the estimates for 1971for the remaining years by applying the official production trend percentages.

161. As inputs for livestock come almost entirely from other agri-cultural sub-sectors, they have neither been included as output in thosesub-sectors, nor deducted as inputs in livestock. Certain items, such assalt, veterinary services and supplies, should have been debited, but be-cause relevant information was not available and these secondary inputs wereassumed to be very small, no deduction was made for such costs.

1/ Margin estimated by the Department of Agriculture.

ANNEXPage 3

162. Fishing - The value added in this sub-sector covers commercial aswell as subsistence fishing. Production ana price data for Oman wereobtained from a number of sources, e.g. the Department of Commerce, thewhithead Report, and interviews with merchants and consumers. * Te annualchange in the volume of production is estimated as being very small. The 1/value of gross production figures were reduced by 5 percent to cover inputs.-

B. Mining (Oil)

163. This sector covers all mining activities carried out in the country,namely oil production by the P.D.O. The estimates of value added are basedon the production and price data supplied by the Petroleum Development (Oman),Ltd. Gross value added is obtained as the difference between the gross out-put and the material inputs used in the process of production. The fiscalprice of crude oil is being used to estimate the total value of production.

C. Manufacturing

164. Excluding some very limited ship building (dhow) activity, thereare few small scale manufacturing industries such as handicrafts, silver-smiths, potters, and some coppersmiths. The basic statistics available forestimating value added in small industries are almost non-existent. In theabsence of adequate data, value added was estimated on the basis of thenumber of persons engaged in this sector and the gross value added per person.

D. Construction

165. This sector covers value added in all construction activities under-taken by public authorities, private bodies and by households, including re-pair and maintenance of buildings and other construction work.

166. On the basis of available statistics on public works, it was assumedthat the value added represents 40 percent of the total cost of constructionby the government and the very small amount by households. 2/ In the caseof private bodies (P.D.O.) value added is derived as a percentage (40 percent)of gross investment in building and construction plus the total amount fordrilling, since expenditure on drilline and exploration are assumed to con-sist entirely of wages and salaries and/or depreciation. 3/

E. Transport, Communications

167. Transport - This sector includes three types of transportation:(a) bv LaTnd-Rnvr, (h) by taxi, aAnd ((), bv truck. Tn order to estimate value

added for mechanized road transport, net income (value added) per Land-Roverand tnai wans calculated on the basis of data obtained from the mission'stransportation specialists. Information on the Land-Rover fleet was suppliedby the -rivate-ow.nAed compan.y and by 14mited inquiries in the field.

1/ Estimated by the Director of Commerce.2/ Estimates from the Office of the Director of Planning and Development.3/ Percentage estimated by the Chief Civil Engineer of P.D.O.

A %T,hTYT

Page 4

16o. 'LrLc'.s and.I Land-KROvers are ue to trarLsport thle agr'LcuLturalgoods that are marketed. Approximately 15 percent of the agriculturalproducts go to market ar,d 5 percent o' the value of thnese goods is esei-mated as value added in transportation. An estimated 5 percent of the valueof tle imported and exported goous is added to value aaaea as transportationcost.

169. Communications - The only information available comes from theCable and Wireless Co. Tne company supplied the wages and salaries state-ment. The mission estimated that approximately 20 percent of that couldbe added as profits.

F. Electricity

170. This sector accounts for the generation, transmission and distri-bution of electric energy.

171. The estimates of value added in electricity are based on the datafurnished by the Oman Power Company. Wages, salaries and profits constitutethe value added.

G. Wholesale and Retail Trade

172. The wholesale and retail trade sector covers all persons engagedin distributive trades, including employees, employers and self-employedpersons. The value added in distributive trade was measured through nettrade margins earned by traders on various types of products entering intowholesale and retail trade. Information for trade margins and value ofgoods was obtained through the Department of Commerce, Department of Customs;and a number of traders. Some estimates were made by the mission. Thequantity of agricultural products entering into trade was estimated byMinistry of Economy officials and the mission as 15 percent of total pro-duction (the remainder being home-consumed). Value added by trade is de-rived as a fixed 20 percent of the value of exports and the c.i.f value ofregistered imports (these are private imports only since government and con-tractors imports are not registered). The margins for agricultural machinery,water pumps, and diesel engines are set at 50 percent. Under the assumptionthat at least an additional 50 percent of these items. especially waterpumps, are not recorded as imported through regular channels, we have in-creased the actual amount by an appropriate profit margin. 1/

1/ Margins are based on the estimates and observation of the agriculturalspecialist- nf t-he mjssionn

ANNEXPage 5

H. Banking

173. This sector involves only corporate banking institutions. Theestimates of value added in banking are mainly based on waRes. salaries andprofits, which are available from the British Bank of the Middle East andaccount for 85 percent of the banking activity in the countrv. We haveassumed that the remaining 15 percent of banking activity contribute about15 percent to value added.

I. Ownership of Dwellines

174. Value added in this sector is measured bv the rentAln accruingfrom the ownership of dwellings including imputed rent. The rental incomefrom buildinga other then dwellings origlnateg in the sector making use ofthe property, and as such it is part of the value added in that sector.

175. Value added in housing in the capital area and in the P.D.O. equalsrents in the capvital area times the number of dwellings. Added to this isan estimated number of dwellings for the rest of the country (based on theaRssumtions of a -orulantionr of 600,000 f and an average of 6 persons perdwelling) times an estimate of rent (which is assumed for the years 1967-1969to be 5 perceet of the 1^D category, rent in the captal area=-180 R. S. peryear and 6 percent for the years 1970-71).

J. Public Administration and Defense

176. Value added in this sector consists of wages and salaries ofg,rrnn &na.%-~U, L%MAALULt$ WA.W&~LOW. PC @UUIJ U~L Llo WLJI.LW;4 JLa.gove:meZt "+Lrees, -lclud..:-ng dee.epersonnel', data Io. -wh.ic'-were obutain-ed from the budget.

K. Services

177. Income arising in the services sector consists of income of personsengaged in domestic services, hotels and restaurauts, and other personalservices. The incomes of educational, medical and health services personnel,pro-v ded entirely by the govermenat, are presently included in the "PublicAdministration and Defense Sector." Wages, salaries and profits (whereverapplicable) were used to estimate value added.

Lae u--'er of persons engaged in dizzerent occupations was obtained

from the findings of the Whithead Survey and mission estimates.

ANNEXPage 6

II. Expenditure on Gross Domestic Product

179. The var ou flows of thI e ktable ar. w L elow- 'ln the ordor ir.which they are discussed:

1. Private consumption expenditure

2. General government consumption expenditure

3. Gross fixed capital formation

4. Net exports of goods and non-factor services

5. Net factor income payments

6. Net indirect taxes

A. Private Consumption

180. This flow comprises the value of final expenditure of householdsand pr'vate non-profit institutions on current goods and services. Tnisflow has been taken as residual of total resources at market prices, andtherefore includes increase of stocks, for which no bases at present existfor separate estimates.

B. General Government Consumption Expenditure

181. This measures the current expenditure on goods and services bygeneral government, and comprises compensation of employees including pensionsand purchases from enterprises and from the rest of the world, less sales ofgoods and services to enterprises and households. The term "general govern-ment" includes central, provincial and local governments. The presentestimates have been made from the budget.

C. Gross Domestic Fixed Capital Formation

182. Gross domestic fixed capital formation comprises expenditure onthe replacement of, and addition and major improvement of fixed capital assetslocated in Oman. Fixed assets comprise buildings, civil and engineering works(e.g. roads, etc.) vehicles, boats, plant and machinery, and also land improve-ment.

183. The government sector data has been derived from an analysis ofthe budgets. Information about expenditure made by the autonomous bodies(P.D.O.) was obtained through the annual reports of the company and bydirect contact with the management by mission members.

ANNEXPage 7

184. The method of estimation used in respect to the private sector isbased mostly on assumptions of the mission and data of imports from CustomsDepartment.

D. Net Eports of Goods and Non-Factor Services

185. This flow represents the value of goods and non-factor servicessold to the rest of the world, less the value of the corresponding purchases.These goods and non-factor services comprise merchandise and the provisionof transport, insurance and other services.

E. Net Factor Income Payments

186. This flow consists of the payment to the rest of the world ofinvestment income such as interest, dividends, branch profits netted byearnings of residents working abroad and of other factor income receiptsof normal residents. The data were made available by the BBME and themission's general economist's estimates.

F. Net Indirect Taxes

187. Indirect taxes comprise those taxes paid by enterprises which arechargeable as a buainens exnense Here, we stahallv inrlj,tip Qisuhbidies; whicehconsist of the current grants made by government to producers and are ineffec^t nepative indirept taxp since theu contri4htg t-n facto--er ince'nn butdo not enter into market prices. They may take the form of direct paymentsto producers, oetr of the differenti weer. the b i1 .ng and sellini pricesof government trading organization. In Oman the information in this sectorrefers to taxes collecteA by A only.

Conclusions and Recommendations

188. Considering the yirtua'lly complete abser.ce of lasic statistics,* 'JLr. ~ ~ L Aa. LU ~& 6 _4A VJ.L ~.L L.LJ I&Ij.LV a UiL UA U A..

the first step towards any improvement of the National Accounts Statisticsshould be the creation of a Central Statistical Ofice.. sli oflfice's primaryrole should be one of organizing and coordinating the efforts to compile aset of basic data necessary fOr the estimation of saatisfactor Natiol-

Accounts for Oman.

189. * High priority should also be given to the following recommendations.

1) FA general population census should be taken.

2) The sub-sectors of agriculture, fishing and livestockaccount for approximately 12 percent of the total GDPand, more significantly, employ the largest segment ofthe working population in Oman. We felt that there isa sense of urgency for an agricultural census or sometype of agricultural survey.

ANNEXPage 8

3) It will be beneficial and will improve the quality ofthe value added estimates if the government required theP.D.O. to submit complete statements on production andprices.

4) It is necessary that the government undertake periodicalsample surveys in the manufacturing sector to determineproductivity, and compile annually a list of the small-scaleand household manufacturing establishments.

S) Given the importance of construction in the overall economic

activity in the country, a major effort towards an improve-ment of statistics in this field should be made.

6) In the ahsenre of direct sources of information in the

transportation sectors, it is necessary that the government-ndertake survevs. It should estimate the number of regis-

tered vehicles by major type of vehicle and by each type oftransport. It should also try to evaluate the number ofworkers and the average value added per worker.

7) There is a need to obtain data on electricity generated bysources other than the Oman Power Co. It has been observed

in the capital area and in the rest of the country that thereare a num-ber of electric power generators ow^ned and operatedby private individuals for personal use.

8) There is again an urgent need to undertake sample surveyson retlC1 an.U wholesasle trade. There should be a licensing

system of trade establishments from which value added intraude couUu Ldie estimated.

9) The only recwmmenrdation that appears to be pertinent forthe improvement of the value added estimates in the bankingsector is to obtain information from the remai.ning two banks.

10) The government should undertake sample surveys of rernts inurban and rural areas, and periodical censuses of dwellings.The number of dwellings given by these censuses snould 'eupdated annually by the estimated number of new dwellings.Government should also estimate the rental value of owner-occupied enterprises and government buildings.

11) Improvement of basic statistics in public administrationand defense is possible in the future by including supple-ments in cash and kind given to government and defenseemployees. It would also be important to collect accurateinformation concerning the rent of government owned build-ings since the government is providing housing for most ofits emnloyees.

ANNEXPage 9

hn) The r.er of persons ergage A 4r Ad ffe:ent ocnpati4 -- 4i

the services sector can only be accurately obtained from aPouain Censu. IDt on ear ings of.t. _ F _ _ _ =I_ _ _; %

in various occupations can be obtained from manpower orother socio-econommie surveys.

STATISTICAL APPENDIX

Table No.

Population bv Regions. 1971 1.1Employment by Sectors, 1971 1.2Expatriates and Local Labor employed by Petroleum

DIevelopment (0) and its Contractors 1967-1972 1.3

Industrial Origin of Gross Domestic Product at 2.1lnrkept Priners 1967-1971

Resources and Uses of Gross Domestic Product atTMnrkpt. Pr4inpe_ 1967-1971 2.2

Gross Domestic Fixed Capital Formation, 1967-1971 2.3

Balance of Payments, 1967-1971 3.1Oil Eports by Destinaton, 1967-1971 3.2Composition of Non-Oil Exports, 1970-1971 3.3Composition of Pr- vateC-ommercial Imorts, 1970-1971 3.L;flrection of Non-Oil Exports and Commercial Imports,

19 70-1071 3-5

Sur,,witaT. ofl 4'fl,n,,,,r--n 0l¶ o an,- T;",rnarAl 4 4,, rSAaum,ta.J -1-- 'J.JW Revenues and L-pe-LditLues,1967-1972 5.1

Pu,,nwnn+ fl,arno,4P ao-,, a 1701,A0 70 1~9Cur..L .I. ..I .'.JM 5 v - - -..> e.evneI 16=9 I5.

Current Government Expenditure, 1967-1972 5.3(rn.,,,n^. l,n+ Tlve,ol ,, + P A n 1A7_1 070 I: )1Expenditures on On-Going Development Projects, 5.5

U- Sector_, 10971-1077Expenditures on Proposed Development Projects, 5.6

°y~ Sec tor, 19Q72-1907714' Ji IAJ J. .7 L. L_ ./ I

Foreign Costs as Percentage of Total Costs of On-GoingV,revlopm.ent Projects - B;0.y Sect.or, I1971 197'7 C. 7

Mrl.Aet F.dJy ..JLIve;j 9 ..L7LAJ.7 f 6~.1

Consolidated Accounts of the Commercial Banks, 1968-1971 6.2BD -LI 'r. ce kciux ae4t of rha Currer.cy Authorit 6.3

Foreign Exchange Reserves, 1968-1971 6.4

Production of M4ain Crops, Acreage and Value, 1968-1971 7.1lu.i.mal P op-Uation an. d Vo-LUcUtio, U7 (U............7.... L7. 19 - 1 .2

Imports of Agricultural Inputs, 1971 7.3A-Verage M on4 - ... L.. L... I 1Lfa ' 7I L

Monthly Maximum and Minimum Temperatures 7.5

Oil Production and Exports, 1967-1972 8.1Posted Priee and Average F'Sca1 Value of Cr-ude uil 8.2

Exports, 1967-1972Capital & Operating Expenditures oI r. D. kU), 1967-197( 8.3Fixed Assets of P. D. (0), 1969-1971 8.4

-2-

R6gistered Motor Vehicles and Dhows8, March 1972 8.5Principal Surface Transport Corridors, 1972 8.6Internal Air Services, March 1972 8.7Indicators on Education, 1967-1972 8.8

Development of Prices, Rents, Salaries & Wages, 1968-1972 9.1

Table 1.1: POPULATION BY REGIO1S, 1971/t

Ae g l'op-lation

9atinah Coast 250,000Interior Oases 250,000hiascat/lviatrah C<,apital Area 30,000Dhlofar 30,000!)esert .Area (Nomadic Tribes) 30,000Musandam Peninsula 10,000

Total 600,000

1/In the absence of a census, various sources put the estimates of populationwrithin a wide margin of b50,000 to 1,000,000 and more.

Jource: l1ission Estimates.

Table 1.2: EMPLOW 1l%IT LY SECTORS, 1971

Sectors 1'Numbe r

Total Labor Zo2 ce/- 300,000of which:

Estimates of the gainfully employed7 1 1AD,000of which:

Agriculture 109,000Fishermen 1 5, 000Government 13 14 000Contractors 6o000Other private A 5>oooOther (Shopkeepers. servants, handi- 5,000

craftsmen, taxi-drivers, etc.)

1/ Porulation of age 16-60 taken as representing 50( of the totail.2/ Females are active mostly on farms dealiTng with cattle and pctilti,,-/ Including local walis, police, guardS, servants, drivers.// Petroleum Development (0), Banks,s Merchants, Shell Markets, etc.

Source! Mission R t.i mates based anrnroximatelv on the nrouortionsof ti' iarold Thitehead and Paztners LTD EcoomirC Surve-v i'.

'Jable 1.3: ?ATM'iT.:T AK',I LOCAiL L.-LOF Z'>LO ZL]P.D. Tb7 'L'l ITS COL'TnLACTOiiS. 1967-1l72

(L'umers )

1,97 1968 1J(9 C 1970 1971 1?7,-'

' r Bcevi1l nnmpnt (C)

+'T atite t90 1!? 1I7 .),86 5 .2

omaii (20 630 717 736 1 "O) 1,027Total r) 1,053 l7T 1i27L 1, E z

ontractors + O1'S Tr-orli-

for P.D. (0)

!Loa-triates n.a. n.a. )t39 61 7 i19 .9 (' ot'. n.a. C.7 3. 1 - X ±12- C-'

s.'' per ,NU IJ -Lc '(C.

3ourco: PetroleiLm Development (Oman).

Ta`h1 2?1: TNDUSTRTAL ORIGIN OF GROSS DOMESTIC PRODUCT AT MARKET PRICES. 1967-1971(in millions of current rials Saidi)

1967 1968 1969 1970 1971

Agriculture, fishing 14.3 15.1 16.0 16.6 16.8Mining (oil) 15.6 59.h 81.7 82.6 93.9Manufacturing /1 .1 .1 .1 .2 .2Contruction. 1 8.3 7.3 7.7 8.5 21.0Transport, jumurndcations /3 .3 .3 .4 .5 1.0

1 .4,^4 +.,-/4 _ _ _ .1 .2

Wholesale and retail trade /1 .8 .9 1.2 1.5 2.6DeBai,g /6 =1 .2 .3 .6 .9

Ownership of dwellings /7 1.2 1.2 1.3 1.5 2.1

defense7 .6 1.3 1.8 2.3 4.1I-vCe /9j --- .9 1 ,0 1.7

GDP at market pr4ces 42.1 86.7 1114 115.4 14"4.5

T lA 11' I11

?'ThTD A. U S..L Li 9 P~' I7 :II ') Ii!. I 1.1GDPa 1 dt fcwor eos 41.3L Wf.7j " 0.2 -''4. ll3.

/I' 4. . 4---4 S-i- U. 4cr5 * L L.' ; - 4 144- (AIuY .l -. I.. nevAA%d. i5

estimated on the basis of wages, salaries, and profits./2 ~~~'mAdted L- cor ,'&4tu^ 4 - f Ln whe -os 4', 4--r&v 4 . cor.ns*xd-&4io. ,/c ZQ " .L4I..U LU I.IJLO%.L. ISAVO &4iJVQ V.L %"&U. tAd SSL VJVJS..'LLV .A-i.LL "I Mv - I/.J'L LO S.LAVw

contribution of Petroleum Development of Oman (P.D.O.) in construction hasbeer. coz1 -uJ edU on L I We assar tu-p'on 'W.Ia'L. '' u ex-F e or, 16' Ir .I.L14 g aSin

exploration are wages and salaries and/or depreciation./ _n _ , __ A Ak _ _ \_ ^ d _r .J _ -L -1- ---- _4. --- / .t±ceu±aLsu .zruiu; i.j eun ;*W u.L w &ms ] im xports plous vA-wL IS s dU 1.uJ

assuming that 15% of the agricultural products are marketed, transportationcosts are estimated at 5% of- -per-e _d (c)\ -s-i-- Zr- -number of trucks landrovers and taxis used for public transportation. ForcomRmunications I1gures were ta.k-Un from tne CaleU and 'wire_LdS CO. Wagesv

salaries plus 20% of that added as profits./4 The Oa n Power Co. pre . ns the onl avaiUlabe soUrceU_ fUor ts seWtor. Tell

company had negative profits for the first two years./:: FtBimaCed as 20% Of totaL iport8 plus eXports. In aditiTon it also includes

marketing of traditional products as well as estimates referring to unrecordedimports of agricultural machinery.

/6 The banking sector is based on the information from the BBME, which constitutes85% or the banking sector activities in the country.

/7 Value added in housing in the capital area and in P. D. 0. equals rents inthe capital area times the number of dwellings in this area plus tne number ofdwellings in P.D.O. Added to this is an average number of dwellings for therest of the country (based on the 600,ouu population and an average of 6 personsper dwelling).

/8 Wages and salaries of Government and Defense personnel./9 It is estimated that 5,000 persons of the labor force are gainfully employed as

servants, shopkeepers, taxi-drivers, etc. Wages, salaries and profits of thetwo hotels are also included.

Source: Mission Estimates based on information and checking with the Ministry of Econony(Thvn p_+misnt+ of Aa'wicullt.~'a, T-nw+pa+w"rtof ('.rimnr,cs i- rwrec+o.~-ri V', +ru..), Office

of the Secretary of Financial Affairs (Director of Audit, Director of Accounts),(ra)r+; Leadf PIAnng ncg n nt.vaip%ma.+; MYL4 x of D ++I T)-lI e --o4,(Oman); L.eading merchants.

Table 202: RESOURCE AND USES OF GROSS DOMESTIC PRODUCI AT MARKET PRICG;, 3967-1971'Th millions of current rials Saidi)

1967 1968 19695 1970 197]:

Total domestic reSource use 35.3 35.3 37.F; 48.8 89.1

Total consLutiLon (expenidituares 22.6 24.6 27.0 35.8 50.'5Privrate / 20.8 20.8 21.9c 22.0 24.4General government 1.7 3.8 5. 2 13.7 26.2

Gross cdomestic fixed capital formation 12.7 10.7 10. 8 13.1I 38.14

Net exports of goods and non-factor services 6.8 51.5 73.6 66. 6 55 5Exports of gooxis and non-factor services 15.5 63.1 85.5 87.6 99.5Irq)orts of goods anad non-factor services 8.7 11.6 11.9 21.0 44.0

GDP at market prices 42.1 86.7 1LL-.4 115.41 :L44..5

Net factor income payments .6 23.7 33. 3 28.14 33.6

GNP at market prices 41.6 63.0 78.;L 87.0 110.9

Net in(di rect taxe s .8 1.() 1.2 1.1 1.1

GNIP at factor costs 40.8 62.0 76.8 85.9 L09.8

Gr:oss domestic savings 19.5 62.2 8 4. 4 79. 7 93.9

Gross national savings 18.19 38.5 51.1 51.:3 60.3

/1 Calcullated as residual; therefore includes changes of stocks for which no bases at present existfor separate estimates.

Source: ]!.ission estimates based on information Erupplied by the various departments and offices ofthe Government of Oman and Petrolenm Developyrent (Oman).

Table 203: GROSS DOMESTIC FIXED CAPITAL FORMATION, 1967-1971(in id I ,4 11 one,of current <rSl- a 4 4a-d- /

1Qh7 1OA o_,O 1079l 1071

>1~~~~~~~~~~~=-1 4t-8. 11 ,9 9.6 8.9 O I9.7 1ff.Oi n-'-t.Il e aO 01S 'I If 7

Other private sector/i .5 .6 .7 1.7 2.3. 4c sector . ' . .'.'

A~~JU~~.L ~ ~ .'~* I I.''. I .~~~LVJ~ )I.J.

A It is assumed that there has been some private investment (non-oil) inconrsrution," ship 'u-lding (www)j water pumps, other agriculturalmachinery and diesel engine8, trucks and other vehicles used in pu;blict'ransporta'iiicnl.

Source: i'suion Fstimated based on information provided by variousDepartments of the Governmnt and Petroleum Development (Oman).

Table 3.1: BALANCE OF' PAYMENTS :L967-1972(imillions oi' rials Saidi)

1967 1968 1969 1970 1971 197'2/1-

1. Receipts fr-m Oil Sector, net 4.440 28.50 42.10 48.82 53.82 56.50

a) Exports of OiL2 14.64 62.30 84.93 87.18 99.04 98.78b) Payments to the Goyernrmnt - 1.90 -25.50 -38.60U 44.40 -47.90 -51.50c) Local Expendityr -' - - 2.50 - 3.00 - 3.50 - 4.42 - 5.92 - 5.00d) Imports of PD- -4.52_5 - 3.30 - 5.40 - 9.50 - 9.00e ) Investm,3ntfsN - 6.00 - 4.64 - 6.74 - 5.72 - 7-98 - 5.78f) Remittances of Expa+riates /A - .58 - .66 - .76 - .86 - 1.00 - 1.12g) Investment Income -r + .86 -2'2.90 -32.03 -26.38 -26.74 -26.38

2. Non-Oil Exports & Imports of Goods, net - 3.29 - 5.23 - 8.o4 -15.22 -34.09 -51.60

a) Traditional Exports (f.o.b.) .90 .75 .6D .39 .43 .40b) Imports (c.i.f.) - 4.19 - 5.98 - 8.614 -15.61 -.34.52 -52.00

of whiclh:Private - C mercial - 3.59 - 4.0o4 - 5.62 - 7.59 -:L3.78 -18.00Government T - .6o - 1.70 - 2.3) - 7.00 - 8.50 -16.00Contractors 77 - .24 - .7:2 - 1.02 -12.24 -18.00¶/

3. Services, nmt /9 + .10 + .20 + .25 + .30 + .60 + 1.00

4. Non-Oil Factor Incomes, net + .27 - .15 - .53 -1.18 -5.87 - 9.19

a) Outgoing transfers /10 - .23 - .75 -1.13 - 1.78 - 6.27 - 9.59b) Remittanuces from abroad + .5D + .60 + .6D + .60 + .40 + .40

5. Current Account Surplus (+) Deficit( + 1.4B +23-32 +33*78 +32.72 +14.46 - 3.29

6. Ca ital non-oil net n.a. n,.a. n.a. n.a. 1.00 _ _T vPivate ap al n.a. n.a. n.a. n.a. -_

b) Public Capital n.a. r,.a. n.a. n.a. 1.00/l - -

7. Changes in Net Foreign Assets (-Increase) (+ Decrease)/12 n.a. -22.00 -33.16 -32.54 _13.25 + 3.00

8. Errors and O)missions - - - 1.32 - .62 - .18 - 2.21 + .29

1/ Foreca st.2/ Fiscal price per barrel taken as being equal to the export f.o.b. price.3/ Estimated expenditures on local wages and salaries, services, local materials and other supplies, local police, taxes for vehicle registration, etc.4/ Items c) through f) equal to total capital and operating expenditures; depreciation not included.5/ Computed as residual, before depreciation.6/ Mostly imports financed from defense budget.7/ Imports of construction material, machinery ot' contractors carrying out public developmtent projects. These imports are assumed to amount to 60% of development

expenditures ( local costs account for about; 20% and factor payments included under 4a) for about 20%).8/ )alculated a1s 60% from rials Saidi 30.0 millioris as plausible cash advances to contractors till the end of calendar year.9/ Includes catering,expenditures of resident missions, sea transport by dhows, sales of haandicrafts and other articles to visitors, etc.

10/ Includes all factor transfers of Contractors and remi.ttances of all expatriate personnel hirecd by G overnment.11/ Private loan guaranted by G overnment with promisory notes.12/ Includes chaLnges in Government foreign exchange holdings and foreign assets of the Commercial Banks.

Sourze: Mission Estimates based on data supplied by Omani authorities, Commercial Banks, Petroleum Development (Oman) and Economic S,urvey of Oman prepared by theWhitehead Consultinig Group 1972 (the latter parti-cular in regard to trade figures 15967/197'0 and figures on the number cf Omanis working abroad as basisfor the! estimates of remittances from abroad).

Table 3.2: OIL ER?oftTS lv D3TIVA:TION, 1967-1971(in millions of barrels)

iycr iyso i969 i97-0 i9711967 190 jvo19 e y J4U __

Denmark 2.!4 2.7 6.7 6.2 3.0trance 1.3 5.2 10.2 11.h 10.7.'ermany, Federal i.eoublic - - - .o -

Italy - 1.2 .6 - -

Japan 9.0 27.0 31.9 36.5 35.9Malaysia 1.5 23.6 17.3 21.6 1L.9I'etherlands .8 6.8 26.0 1O.o 12.2Norway - 2.3 5.0 11.2 9.LSingapore - - .8 .L -)olth Africa _ _ _ - .6

,Dweden 3.9 9.7 11.5 IL..5 8,7United Kingdom 2.0 9.7 9.2 5.9 5.7

Total 20.9 25.2 119.2 121.3 1o6.?

Source: Petroleum Development (Oman).

Table iU. : CO7'OSITICN OF ICON-OIL EXPORTS, 1970-1972(in thousands of rials Saidi)

1970 1971

i-esh and dried limes 275.21 331.2i)rn Dates L8.7 28.1i'resh Dates 10.1 1X1.9Tobacco 15.3 21. 5(Utlier Fresh fruit and Vegetables 1.5 2.7Fish 8.6 3.1

of which:-- Dried S Salted ( 1.8) ( 3A)-- Wet(Sardines) 6.8)

(oat. Skins ind h iis n .('Lhe 124.24 1.3

Total 388.5 L229.8

>nh i ,y', , t2iiQ~+ t-mQ 1) nn-rf ' +m~

J1

Table 3.3L: COMPOSITION OF PRIVATE-COMMENICIAL IMP0OTsi 1970-1971(In thousands of rials Saidi)

127 171

Rice 783 1,b89Wheat and Wheat Flour IL68 52(Friuts and Vegetables 288 2?R6

oCorf ee R39 sJ99Tea 9?Sugar °37 :1Other fooDA I49 1 L19

Total Food 28 50 1."996

Motor Vehicles 704 1,570-Machinery and parts 232 1,077Electric appliances and radios 335 803Petroleum Products 340 951Chemical products, other 183 4t2LTextiles 789 87E8,ement 125 LTobacco products 116 309Alcoholic Beverages 25 179

Total industrial ,80b9

Other Imports 1.891 *- 1)

of whichs:-- `urn-iture & other household ( 99b) (1,050)

and office supplies-- Other Building material ( 28t) (

To tal TrnnArt.q 7.590 l3.7X8

1/ Imports of P.D.(O), Government Departents and CortraPtors undertaking publicDevelopment projects not inoluded.

Source: Gustams Department.

Table 3.5:DIRECTION OF NON-OIL EXPORTS AND COMNERCIAL IMPORTS,. 1970-1971(in thousands of rials Saidi)

1970 1971

Imports 7,590 13,784

Australia 763 970RPU rm, a 392 1,098

Germany, Federal Republic 152 353GU"L Area (Dubai, Bahratn, Qatar etc) 97N 2,457India 84b 971TIran 1282 0

Japan 465 847Netherlandrs 321 )198Pakistan 237 454Slngapore 246 176

llnited Kingdom 1,122 2,708I,H ~~~~~~~~~~~~200 117

US oJ I I n7

Other 1,691 2,303

Exmorts 389 430

Gulf Area (Union of Arab Emirates, Bahrain, 97 316

watari

India 49 28Iran 8 33

Iraq 138 47Other 20 6

Source: Customs Department.

Table 5.1: SUMMARY OF GOVERNMENTT REVENUES AND EXPENDITURES, 19 6 7 -1 9 7 2/-

(in thousands of rials Saidi)

A c t u a I s Budget

…--…~~~~~~~~~-

Current Revenue 2,800 26,700 40,000 45,700 50,1io 53,900of which:

Oil Rievenue 1,900 25,500 38,600 44,400 17,900 51,500Other Revenue 900 1,200 1,400 1,300 2,200 2,200

Current Expenditure 1,723 3,780 5,147 13,721 26,240 240,828

of which:

Defense/l 1,200 3,300 h)554 12,223 16,340 29,128Other 523 h80 593 1,298 9,900 11,700

Current Surplus 1,077 22,920 34,853 31,979 23,860 13,072

, .

Development Expenditure'/ - - - 398 20,400 36,300

Overall Surplus (+) + 1,077 +22,920 +34,853 +31,581 + 3,460 -23,228d'Deficit (-)

/1 Includes current and cayital expenditures of the Armed Forces asshown in Table 5.3.

/P Since the start of the oil revenues, late l1ei7 througTh 1970, total publicdevelooment expenditures amounted to about rials Saidi 3.3L1 million. The'yw.ere not recorded in the regular government and auditing documents, and arenot, shona in this table.

*/R J)eficit being financed by borrowing with the banking sector.

Source: Office of the Secretary for Financial iffairs.

-- ,l- 5.2: Ct ,h17u IVflll 2j i T Ji I1,; "I'l[-± 1f-

(ir1 bTLotlTjdJf3oflI0 1r,J..ic.ui

___ _kC tU a. .sucig etaryEstimates

1967 1900 1969 1970 1971 1972

Cril tevenue /1 1,900 95,500 38,60u0 it, LOO 17,900 5i,500of wihich:

I{oy.alties - 500 7,100 10,500 11,900 12,100 ]2,50(Taxes 900 1h,W00 27,900 32,400 35,500 j9,OoOther /2 500 - 200 100 300 -

Other t{evenue 900 1,200 1,i4O0 1,300 2,200 2,4100of which:

Customs 800 1,000 1,200 1,100 1,100 1,000Interest on Investment - - - - 200 -Income Tax - - - 300 700,L0ort dues - - - - -

Other 100 200 200 200 600 htCO

Total Revenue 2,800 6,700 I,O,000 15,700 50,100 53,900

1/ Cash payments during the calendar year (not payments due for the given calendaryear).

2/ Principally concession rentals.3/ Dues payable by tankers loading crude oil at Oil Company Ports. collected on

behalf of Government by P. D. (0) Ltd. Other landing and port charges collectedby Customs Authorities.

Source: Office of the Secretary for Financial Affairs.

Table 5.3: CURRL-17T GOVtVNI&DNIIT EXPEBDITU1SE, 1967-1972/~

(in thousands of rials Saidi)

A c t u a . s Dud~etarZstimates

1967 1968 1969 1970 1971 1972

D)efense Etpenditure/2 1,200 3,300 1, 551' 12,123 1(6,3Lo 29,128of which:

Current 800 2,564 3,423 5,60i! 9,01.2 13,851Capital !tOO 736 1,131 6,819 7,328 15,277

Non defense total 523 1480 593 1,295 9,900 11,700of which:

.rivw Purse 148 128 152 193 2,50(0 3,000lealth 7 31 52 71 1,100 2,000-iducation 8 12 23 60 500 700

J.,o%;alty lPayments to Sheikhs 3 2 3 6 300 100.cgriculture - 7 15 57 500 60CPublic Works Department 11i 10 17 25 200 200Transportation - 10 17 26 300 700Dhofar Province - - - 1 1,300 1,l400Office of the SecretarY for - 14 6 9 1,200 1,500

Financial AffairsOther 8143 276 308 850 1,700 1,200

Total 2..urrent Expenditure 1,723 3,780 5,187 13,721 26,20 140,82"8

/1 Fimures for the period 1967 through 1970 etontain inaenuraripebecause all the transactions were not adequately recorded.

/2 According to official estimates about 15% of defense expenditures in 1971and 1972 serve de facto civil purposes (roads, wells, education, health.

housing, free air-transportation, etc.).

Source: Office of the Secretary for ftnancial Affairs.

Table 5.)&: GOVefNMENT DEVELOPMENT EXPENDJITUtii,3, 1'6)7-1972

(in thousands of rials Saddi)

1967 _UQ> ry1 90*7(ng^)t

Harbour and Ports - - - -

Airnort - - - - 1500 2,900

±toads - - - - , 800 6,100

Hlealth - - - _ 1,900 3,500Education - - - - 700 2,000

Public Buildings - - - - 1,300 7,000

Dhofar Development - - - - 2,200 3,3001

Other - 9 20 390i 1,200 "CY-

Total - ' -)3 /9 dU 'z)o 20400

/1 Bud-etary Fig.zres.

/2 Since the start of the oil revenues, late 1967 through 1970, total public

development expenditures amounted to about rials Saidi .3!. milliono. Theyr

were not recorded in the regular Government and auditing documents, and are

not shown in this table.

Source: Office of the Secretary for Ainancial Affairs.

Table 5.5: EX'ENDITURIS ON ON--GOING DE-VED)PMENT P.ROJEy/TS:--BY SECTOR, 1971-1977- thousands of ri.als Saidi)

Total19719/2 197 2 1973 1974 1975 1976 1977 1971T1977

Caital Expenditure 1 % 1,54 2 892 18 18 - 754of which:Transport 1.7,713 18,1L30 10I,498 1,740 810 - - 48,891Health 2,383 3,058 767 - - - - 6,208Education 660 1,580 272 102 - - - 2,614Agriculture 312 !502 292 222 82 18 18 1,446General. Construction of Housing 1,866 4,,571 2,251 - - - - 8,688Power 5146 637 55 30 - 1,268Water Suippl ard Sewerage 7 38 337 - - - _ - 1,075Telecounmnldcation and RLadio 1)3 670 1,399 1,392 - - 3,,564

Current ESemditure - 2W206 L47 6292 6,230 6,541 6 31,611of which:Transport - 1,187 1,619 1,529 1,341 1,378 1,626 8,680Health - 222 1,112 1,262 2,224 2,224 2,224 9,268Educ ati on - 27 267 345 368 3P4 398 1,789Agriculture - 360 428 499 6 0 893 953 3,773General Construction of Hounsing - L65 601 1,195 1,195 1,195 1,195 5,546P ower - 110 1iL4 141 141 11L 141 815Water Supply and Severage - 90 224 238 238 243 2L7 1, 280Teleconuunications and Radi.o - 85 _ 3 _3 _ - 3 83 460

Total Capital and Current 24,321 31,691 20,009 8,778 7,122 6,559 6,885 105,365

71 Excludes some minor projects for which the data were not available aad military Expenditure./7 Capital expenditure for 1.971 include somet pre - 1971 Expenditure

Source: Government Lbpartments and Agencies carrying out development Projects.

Table! 5.6: EXPEDITIRES ON PROP(BED DEV:ELOP]NT PROJECTS BY SECTOR-1972-1.977~~~ 7b~(Jn thous;alns of riaLs Sai

Total1972 .1973 1974 1975 1976 197 7 1972-1977

Capital Expenditures 875 9,877 12,519 4,0L 150 L,5 2hS. 7

of which:Translporti - 5, 550 6,650 1, 750 - -- 13,95Q

)griculture - 301 918 298 150 45 :1, 712Health - 1,300 1,800 900 - -- 4,00)

EducELtiOll _ _ _ _Ceneral Construction and Housing - - - _ . _

Water Supply and Severage 690 2,230 2,480 600 - 6* ,000Power 185 496 671 463 - L,8115

Cui-mnlRenditure- - 287 902 1 _80 2,021 2,2'70 6p663

of wichsTransport - 118 140 156 1)4 132 690DAgriculture - 1.69 591. 658 700 4 158 2,57,6Health - - - 550 1,050 .1,60D

Education - -

General Consatruct1ion on Housing - - -

Wtater Supply and Sewerage - -8 80 207 305 308 900Power - - 91 1L59 322 3;22 894

Tola1 (ital and Current 875 10 ,64 13 2 5,L91 2, 171 2,315 4,37

/1 Excludes some iminor projects and m11litary expenditure.

Source: Government Departments.

Table 5.7: FOREIGN COSTS AS PERCENTAGE OF TOTAL COSTS OF ON-GOING DEVELOPMENT PROJFTS BY SCTOFL, 1971-1977 /j

To tal1971 /-2% 1972 % 1973 % 1974 % 1975 % 1976 % 1977 % 1971-1977 %

Foreign Capital Cost 189Y4 741 22,137 75 12,252 79 2,546 73 637 71 _ 11 61 11 61 55,688 76of which:Transport 13,169 74 13,51.6 75 8,376 80 1,126 65 567 81 - - - 36,752' 75Health 1,714 72 2,21.4 72 572 75 - - 4,50° 7(2Education 526 8c 1,268 80 221 81 82 80 - - - - - - 2,097 80Agriculture 262 84 326 65 72 25 132 59 70 85 11 61 11 61 884 61General Construction ofHousing 1,369 73 3,451 76 1,773 79 -- - - - 6,638 l76Power- 436 Bc, 570 89 45 82 25 83 _ _ _ _ - 1,076 85Water Supply and Sewarge 532 71 208 62 - - - - - - - - - - 740 69Telecommunication & Radio 86 83 5414 81 1,188 85 1,183 85 - - 3, ooL 84

Fcreign Current Costs 1,44 52 2,237 50 2,458 47 3,0?? 48 3 039 46 3 031 44 i, 96: I. ?of whiich:Transport - 7317 6? 1,011 62 838 55 637 48 645 47 668 41 4,536 52Health - - 145 65 535 48 630 49 1,324 60 1,324 60 1,324 6o 5,282 57Education - 19 70 191 72 241 70 257 70 268 70 278 70 1,254 70Agriculture - - 144 40 165 39 184 37 209 33 207 23 166 17 1,07.5 28General Constructing of Housing - ,49 30 186 29 409 34 409 34 409 34 409 34 1,871 34Power - - 2018 29 21 29 21 29 21 29 21 29 21 165 20Water Supply and Sewerage - - 30 33 84 38 90 38 90 38 90 38 90 38 474 37Telecommunication & Radio - . - - 36 80 67 81 67 81 67 81 67 81 304 66

Total Foreign Capital ancl Current 18,094 7L 23,281 73 14,489 72 5,034 57 3,659 59 3 47 3,042 44 70,649 67_ _ ~ ~ ~ ~ ~ _ _ _ _ -

/1 Excludes some mrinor projects for which data not available and defense expenditures, but includes Dhofar Province Development Projects./-2 Inc:Ludes some Pre - 1971 expenditure

Source: Government Departments and Agencies carrying out Developrnent Projects.

Table 6=1: MDiETiUiLY SURVEY, 1968-1971(in tnillions of rials Saidi)

End of year

196 1969 1970 1971

1. Assets and TJa.bilities

coreign Assets, nst lnet 51.26 51.8C! 95.09.Claims on Government .00 .00 .00 .00

CThims on Pri,vate ector 1.01 2.31 3.70 v.32

m ctbal 9ssets=LiaVili t.es lq .10 i3 57 85.51¼ 9.91

i"Jney 3i23 -1 ~3.l7 7.3 13 1.of wlich:Currency in Cir Iuation 2.On/2 2 oof_ .8n .80

Demand Deposits 1.23 1.-17 2.8L LtIl6

.Luasi Nloney 2 12.50 25.50 27.76 32.09-ovcrnnent. Deposits [ l09 25.77 50. 5 53.88

Other i1;ems (net) _ .72 - 1.17 _

2. Changes during .Year

Foreign .Assets, net. - +33.17 +30,.58 +13.25;,lairrs on Covernment - - - -

Claims on Private Sector - + 1.30 t 1.39 + .62

rJoney Supply - + .2!i + 1 .18 - 5.79

Time and Savings Deposits - +13.00 - 2.26 + !w. 33

loverniment Deposits - +21.60 + I4J. 7

1/ ITW' estimate of Du.ulf rupees" in circulation prior to the introductionof national currency in Ma.y- 1970.

2/ Primarily fixed and time deposits of the Royal Family. Prior to July 1971, thVesc

deposits were not segregated from Government deposits.

Source: Oman Currency Authority and the Commercial Banks.

Table f.2: C014SOLIDATLD ACCOUNTS OF TEE COMEMCIAL BAIKS, 1966-1971(in millions of rials Saidi)

&d of year1968 1969 1970 1971

Foreign Alssets, gross 121.2 28.2 29.0 37.1Forei,gn Liabilities .2 .9 .6 2.1

Foreign Assets, net 1l.0 27.3 Wz. Th.O

Claims on Private Sector 1.0 2..

Reserves .9 .9 .-

Assets total, net of foreign 1.9 2O. K2. liabilities

Demand Deposits 1.' 1 .

Savirngs and Time Denosits l-'; L 27. 3'.1

;;nv rnmernt. Denosits 2.1 A.0 2.?

Other items .1 - . - . 2

Sources: The Conmercial }3anks operating in Oman.

A 6.3 T B itrH' Sl-IEET OF nlMANia 4iTTR?H'?!Y UITHn(TTTY

(irn thousand of rials Saidi)

M- 1970 TMarch 1971 4arch 1972

-3 0L.7LJ AfOA). i r)oR),iloreign .i"s'setS 3,7 5,6 10,98]4

Other 209 161 309

Total Assets/Liabilities 3,083 5,825 11,293

(,urrency in Circulation 2,768 -,662 10,77T

Balance due to Banks 17b 110 ( 925)Capital and Reserves vu >

Other L91 3 _

Total 3,b83 5,825 11,292

Source: Oman Currency Authority

£-- - L 1 r~r`mIITr:"I, t'vrc LT Tr' t L)' u T]T)T1FL'Q -Ic1 C'IC 'I ( 1

(in millions of rials Saidi)

Qncd of the ear1t, ;Z4 1,~70 ~ 1'{._L7 u _ .L7 ( . I : , -

iolferTluent Foreigl •xcharine De ..posits 2.0 22.Currency 'kuthority _ - * .

odd - -lff

t rol.- *;

3 olcd Tranclte uosition - - -.

! o0e iEm Incj!2fl?e _ _ , LI

Total .ross L-eserves . 2..C 5 .u

Cnomiercial bwaaksl foreign assets 11.3 28.2 29.0 37.0

Fxorei-n idabilities . * .8 2.;of v hich:Corimercial banks .2 .orurr ency A,;'.uthority- -

let Foreign Peserves 1(.1 )I9.2 L81.8 '. 1

SourYre. Oman Nurrency autboritv and the Commercial PanrlIsOneratir., in Olq;m.

Table 7.1: PRODUCTION OF MAIN CROPS, ACREAGE AND VA 1968 - 197].Waiues expressed in thousands of rials Saidi)

1968 19,69 1970 1971Area in Prod./tons Value Prod./tons V'aluei Prod./tons Value Prod./tons Valu e

Crop Acre4r/

Daltes 65,000 220,536 9,951 218,214 10475 213,57'2 11,026 232,'143 11,607

Limes 10,000 16,617 408 16,264 430 1%;1 453 17,678 47 7

Whieat 2,500 1,,8 86 1,512 91 1,47'6 96 l,BOO 801

SNgarcane 60 195 28 193 29 189 _31 210 33

Tobacco 350 97 21 94 22 592 23 :105 24

Chickpeas 120 54 6.4 53 6.7 51 7.:L 60 7.5

Onions 2,500 6,900 480 6,750 505 6,h45o 532 7,500 56 0

Vegetalbles 100 264 34 255 36 240 38 300 4 0

Lucerne 39000 99,360 926 95A0.0 975 9?2,880 1,s26 :108,000 1,Q8 0

Sorghum 1,000 14,55C 103 14I,250 108 13,8(0 1L14 15,000 12 0

Banana 3,000 2,304. 104 2,256 110 2,160 L16 2,400 12 2

Mango 300 1,455 103 1,39'5 108 1,3350 Lij4 1,500 120

Coconut 800 n.a.' n.a._ n.a. n.a. noc. n.a. o 1I800,000 b14 4.TOT.AL ,730 12,20o4 - 12,595 7 1 3L7

1/ Average current prices in retail trade.2/ Area under cultivation assumed to have remained constant over the period 19683-1971.3/ Nuniber of nuts.

Soiirae: Department of Agriculture.

Table 7.2: ANIMAL POPuLATlON AND vALuE OFIuTIO? - 1970-1971(Value in thousands of rials Saidi)

1970 1971Kind Number Value Number Value

of ofProduction Production

Goats 135,000 130,(,o000

.Sheep 7,200 6,000

Cows 72,000 1,700 6,O( 0 0 2,(00

Donkeys 59,500 65,000

Camels 9,000 10,00o

1/ Values exnressed in current prices and relate to milk and meat Droductio;.(excluding donkeys and camels).

Source: Department of Agriculture*

Table 7.3: ILPO'Th OF !O;ICIJLTULYL INPUTS, 1971/1

.'ertil--ers tons .

of v.hich:oniC, s- u 1I0 u-.j h aLt e tons 1k0

o-orround fertilizer - lt,'l8j5 tons P32

.~ 2y !; cil'eS liters 12000O

-aia-thion 50% E.C. liters 25,000a la e'T Ors1

>micultul miTachine ry ieces 12ot I.:,1lc:Tractors - t-wheel tvo-pe PIeces 32"and and mechalically operate(d sprayers Pieces 150

I,' Tiported by Departnent of igriculture for free distribution/loan to farrler3.

-;ource: Deoartmnent of ajriculture.

Table 74. 1: 1)0.AG MIONTI L' tkiTJ.T L(in mm)

LocationSohar Uizwa Salalah' t- Iina , L.'ahal7t

Exoerimemtal J 4xpe rlmneFtalFariTl- l;arm/ '

Jlanuary 11.7 1C 0 9February 20.1 2'

.arelr 1. Ia: -i 1 ,.!1 .w..

a U/C - 0*i 1].;'1

-Ugulst - ,1., ,5- .e tembl:er - 1:.''.,October CI oveinmber - Jr 1'Dece mbie r 3. 170.

'Jea.rly, avera,-e 37.2 1i w1 9

1/ Averac--e for I9b5-1971.) J/ 'Grerqe for bTovember 192 to i)ecember 1)71.J ,erat-e for 1 C -1971

;-n'mrne: Separtment of Agricul.ture.Department of Development (Ohofar).H4arold V^;hitehead and Partners (Econ1ondieC SuPvenrY1072',

Tahl^ 7.5: MONTHTRLY EXIMUM A14D I1INIMU4 TEMPEHATURES(in centigrades)

LocationAzaiba/l Muscat/2 Salalah/3Max. MM. Max. Mtn. Max. r n

Janunrv 21,.9 1L.7 21.9 18.2 27.2 17.9

February 27.3 16.6 2h.2 19.6 27.9 15.5T7>rch 30.2 18., 26.2 22.3 29.6 20.5

Anril 33.3 21.6 31.6 26.8 31.3 22.7Al, ~39..1 26.3 37.1 30.7 32.3 25.0

.Tune 39.9 28.0 37.1 30.9 31.8 26.1

J.uly 38.9 28.5 37.6 32.6 28.0 24.2August 37.1 26.7 33.9 29.6 26.9 23.2Septemnhr 96. l 2L.5 33.7 28.9 29.0 23.1

October 35.! 22.L 29.8 2L.6 30.L 21.1Nsovember 29.7 18.3 27.8 23.1 30.2 20.hDecember 25.7 1!.6 24.7 20.1i 28.!! 15.9

1/ For April 1OA.uc± 1967^, For January-December 1971.3/ Yor Nove,,.b- 192DeeQ,r171.

Source: Secreta-Jr of Finance, r4lAscat_Department of Development (Dhofar).

l 'al4 4-d .ehead and Partne- (Econ-l Su3rvey~r 1 Q72).la ro-±U YVWI L U iI ~~AL c-L J CLI. 4A.L-1 1 \/-- - -.- ; -

T'able 8.1: OIL PIOMUCTION AND EYT'OPTS, 1967-1972(in millions of barrels)

Production . Exports

10(%7 (A,up. - Dec.) 22.9 20.9

i1' 87.9 88.2

19(e 9 119.7 119.2

lO 1J72.1.3 121.3

197'i1 102 0 1A2 n

.- 'curce: Petroleum Devrelopment (0-an)

Table 8.2: POSTED PRICE AND AVERAGE FISCAL VALUE OF CRUDE OIL EXPORTS/1 1967-1Thc7(in US dollars per barrel)

Posted Price/' Average Fiscal Value'

19G7 1.82 1.6611968 1.82 1.695196' 1.82 1. 710

1970 1.82 1.725Jan. 1/Feh. )Ith 1971 1.82 2.2 cFeb. 15/May 31st 1971 2. .205 2.2 c

Ivne Tht./flecr 31st 1971 2.310 2'Jan. lst/Oan. 19th 1972 2.310 2 l1.lnr -lt.ih/T)ec. 31st 1972 2. Th 216

1/ Prices fixed enx MLina al Fahal for crude API 3

2/9 Figrures are rounded.

37 YiScl1 value serves for calculating net profits of tile conan'a as basis

for the income tax payments. It can be defined as the average posted

D,rice per barrel which reflents the variations of the actual e.x\orted

quality of the crude oil.

Source: Petroleum Develooment (Oman).

Tahl 1 8.3! C4PITT.41A r C iTING JX-NDITTII,'i9 nF P ,D (O) 1967..A?,'(in millionis of rials Saidi)

14(7 1068 1?t.)9 19-70 J71. IL')

(' p * + n '',---* + a 1 -1 D O , f S C e7 1 1

of which:

::)rilling 1.8 2.11 2.7 2. 6.1

Totl n Exenditures 1l.6 i3.9 1L.3 ll.1 2L.j 20

1/' 'a-:ments to G3overnment and Depreciation not included.^, Forecast.

3ource: 'etroleum Development (Oman).

Tablev~R I. * VTYRn a5swTS OF P fI(A'. 1969-1971

(in millions of rials Saidi)

Origina Cost Depreciation I'et Bookl Value19i60 17 1071 1QA9 197n 1971 . 19b(,9 197O 1971

Intangible Assets U85 53.7 61.b 5.2 7.7 10.6 113.3 1,6.o 50.8rx. C' 2 ) 1 J1.0 R 7 11 Al Ic 1 ?)R ?'5 29 ir A t,u A" bb ,LIO )L4 .) ' I j, J0 '1 ~ ~ ~ -- ,

Tota 3 'o l93.i 13.9 19.f 2Q6.0 (n9.I 71-2 7?J

Source: Petroleum Development (Oman).

Table 8.5: REGISTERED MOTOR VEHICLES AND DHOWS, MARCH 1972

Type/ownership Number

Commercial Vehicles 3,600Public Service Vehicles 1,000Taxis (Muscat & Mhtrah) 180Rental - Self Drive Vehicles 200Government Vehicles 350Private Cars 1,000Motorcycles 500

Total 6,830 /Dhows 100 /2

/1 In mid- 1970 there were only about 1,000 vehicles, most of them belongingto the P. D. (0) or Government.

/2 Mission's Estimate.

Source: -Police Department.

Table 8.6: PRINCIPAL SURFACE TRANSPORT CORRIDORS. 1972

Approxima. RZoad kmp Average Traffic Vol. MaintenanceDistances within Oman Transit (Vehicles (GovernLment,

(i~~~~) ~Not Counted Speed per Day) PD0(0) or___________ ~~Elsewhere (k /r _ __ _ _ t her

MUTRAH1-TZKI 160 160 70 50-3000 PD(O)+GMutrah-Azaiba 31 50 500-3000 CAI'aiba..A1 M.,-,,tag4 on1 inn10PDO

Al Mutaag-Izki 84 80 50-70 PD(0)

MIULrah-Izki 160 70 50-3000 PD(0)+Cfzki-,Ni%wa 32 30 30-50 C

zwa-Bahla 57 ~~~~~~~~~~~~~~~20 33-40 uBabl a-Ib ri 97 30 30-40 C

BR I1 il1J,AIDAT I 147 147 n.a. 3u-4u U

MZTRA13PSOHAR 231 200 65 200-3000 GX,idUfrltd-Az1Ubd 31 50 500-3000 CAzai t-S i b 14 n.a. 400-700 C

Sib-Suwayq 91 n.a. 300-400 CzIwav-IL Iniau .- L 37 n. a.20-0C

Al Kheburah-Sohar 58 n.a. 200-300 C

3S (Iu-xeR- BUA an N1C 117 117 20 (10-300) CS c h r-fle aj is 16 n.a. 200-300 CNa ji s -Buramimi 101 n.a. (10 C

YCIIAN-DUPAI.a BURAINI 301 0 n.a. (10- 3CC C&Other

LQ :ar-&traimi 17 20 (10- 300 CBurai.mi-Dubai 200 n.a. 15-40 Other

Via A,'L F-UjAYRAH 238 66 n.a. n.a. C&OtherSohoar-Juncricn Aswad Road 66 n.a. 200-300 CJuict. Aswad Rd-Khatmat Nalahah 17 n.a. n.a. CKhrtatet Mala-hah-A1 Fujayrah 23 n.a. n.a. OtherAl Fujayrah-Sharjah 120 n.a. n.a. OtherSharjah-Dubai 12 n.a. n.a. uth,er

Via AQABAT FAIJAI 240 12 50 n.a. G&OtherSober-Junction Aswed Road 66 n.a. 200-300 Cjuncr. Aswad Roed-Aswad 12 n.a. 50-60 CAswad-Sharj ah 160 n.a. n.a. OtherSharjah-Dubai 12 n.a. n.a. Other

tIUTRAHI-QU RYAT 88 88 n.a. n.a. C

N'UTRAH-SUR 340 264 42 n.a. G-iPDO()Nutrah-Al Mutaag 76 68 50-3000 G+PD(0)Al iluLaag-Al Kamil 205 n.a. n..a. CAl Kamil-Sur 59 n.a. n.a. C

MUTRAH-BILAD BANI BU ALt 30 20 45 n.a. G+PD(O)Mutreh-Al Nuteag 76 68 n.a. G+PD(0)Al Mutaag-AI Ilamil 205 n.e. n.a. CAl RaTnit-Biled Beni Bu Ali 20 n.e. n.a. C

MUJTRAHI-SALALAH 1,054 894 n.a. n.a. C±PD(O)Nutrahi-Izki 160 70 50-3000 PDO()-rGIzki-Tbri Junct. on Mutrali-Salalah /2

Road 170 in.a. n.a. G-iPD(0)Ibri Junct. on Nutrahi-Salala Rd-

Dlawahi /2 534 n.e. n.a. G+PD(O)Bawahi-Salalah 190 n.e. n.a. C+PD(0)

IBRI -SALALABi 944 220 n.e. n.a. G+PD(O)lbri-Ibri Junct. on Nutrahi Saalaih

Road 220 n.a ne __

lbri Junct. on Mutrah Salalahi Road-Salalah 724 n.e. n.a. C-&PD(O)

IRRl-MUDAIRIB 268 123 n.a. n.a. G+PD(0)2,467

TOTAL~,

I/ Distances of individual segments for Mutrahl-bri do not add up to total because Nizwa end Behlle lie somne distance off lzki-Ibri road.

2/Tha f-ff4 . nr ¾a- -. Ao Tolf-Slalo.ih -.A T¾.-4-Co1ol•1, ; .- apresent only miitary.-. an n PD ).

Source: Mission's Observations and Inquiries.

Table 8.7: INTERNAL AIR SERVICES, MARCH 1972

Points Served Equipment Frequenckrlights per weekJ

Government Air Fleet

Salalah Viscount 10Nizwa (Fira) Skyvan 2Sur Skyvan 2Masirah Skyvan 2Khasab Caribou/Skyvan 2Buraimi. Caribou/Sky-van 4Sohar Caribou/Skyvan 4Sib Caribou/Skyvan 6

P. D. (4

Fahud F-27, Skyvan 18Ibri F-27 2Andam Sky-van 2Awaifi Skyvan 2Ghaba F-27 2Lerhwair Skyvan 2Ybal F-27, Skyvan 14Al Huwaisa Skyvan 6Dhahir Skyvan 2Montasar F-27, Skyvan 8Marmul Skyvan 2Fasad Skyvan 2Lehan (Haima) F-27 2

Source:- Government of Oman.- Petroleum Development (Oman).

Table 8.8: INDICATORS ON EDUCATION, 1967-1972

Type of Establishment No. of No. of No. of Teacher/PupilSchools Students Teachers Ratio

Secular Primary Schools

1967 8 2,000 48 1:411968 8 2,000 148 1:1421969 8 2,000 148 1:1421970 16 7,000 96 1:731971 29 14,683 3143 1:1431972 45 15,809 443 1:37

Koranic Schools-

1967 45 7,000 1140 l:501968 L45 7,000 140 1:501969 50 8,000 160 1:501970 n.a. nr.a.1971 n0 a. n.a.1972 n.a. n.a.

Trade School

1969 1 80 12 1:71970 1 70 12 1:61971 1 60 12 1:51972 1 54 11 1:5

Intermediate Reliaious School

1969 1 150 8 1:191970 1 160 9 1:181Q71 1 170 9 1:191972 1 180 9 1:20

Students Abroad, 1972"1 No. of No. ofrolnt.T- eJ Stmdenrt-q

Primary 1 700wntrmedij at 5 90nSecondary 5 201Higher 4I 85Technical 1 20

__________________ Total 1,296

/i As per Mi"arch 1972./2 Koranic Schools teach: religion, lite:7ature, writing.

Source: Ministry of Education and Mission's Estimates.

Table 9.1: D VELOPMENT OF PRICES, RENTS, SALARIES & WAGES, 1968-1972/L(1968 100 unless otherwise indicated)

First Quarter

1968& 1970 19-1 2272

1tasic C'ood. Items1h.eat 10nn 1?2 125 1)Aa'ice 1/ 100 100 11i

1' h fresh, s-lt+ed A ,ri d 100 10n 2nn 300

C"offee powder n.a. 100 1 3 3C'olffee *eed-. () A3 )L

Tea. 100 129 129 129

Sugar 100 113 130 2`0Uates fresh n.a. 1)0 1 1C0M 1 100I: 120 1i1

One tLoomn 100100 1,333T: o . 'OOJS 10 1 7 300 500Small louse 100 156 33S WII:T- T li7 1"I1Mr ,er I',ouse 00 1G7 333 500

''a --es anic al. - s-1 Apprentice 100 100 200 23'1 ClerI 100 120 180 2161 Servant 100 1),7 200 2331 Driver 10UU 133j 1G I°L

1 lorkei' unskilled 100 125 167 2001 Worker semi-skilled 10)0 133 200 2(71 Worker sldlled 100 135 200 250

1/ Prices vary within a wide margin. The price actually- paid results oftenfrom bargaining.

2/ It is not possible to speak of an identical unit of housin-. Indexes givethe idea of a global trend.

'!/ Wa2es and Salaries vary widely pending on the employer, type ofbusiness, locatiorB personality etc. Indexes should be taken only as anindication of a global trend.

Source: In the absence of price recordin[utke Mission ir4t-biated inquiry in thefield checking the figures from memories of custQmrs, merchantsand others. In this effort, the Mission en`oyed the support ofCOoverinment officials, in particular from the Department oI 1Financial

Iffairs.