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Oman - Darwish Bin Isma'il Bin 'Ali Al-Balushi.

The Minister of Finance since March 2011, Balushi took up this important post from Ahmad bin Abdul-Nabi al-Makki. Makki's super-ministry of the national economy and finance was then abolished by Sultan Qaboos. (Makki in October 1995 was made deputy PM for economic and financial affairs, a key post to replace Qais al-Zawawi who died in a car crash on Sept.11, 1995. On Dec. 19, 1995 Makki was made minister of the economy and acting minister of finance. In the subsequent years, while retaining the economy and finance portfolios, Makki was made deputy chairman of the Financial Affairs and Energy Resources Council. This council is chaired by Sultan Qaboos - see background in down8OmanWhoFeb24-14).

Balushi used to be the under-secretary for financial affairs at the Ministry of National Economy and Finance under Makki.

The Oman Tender Board, under the Ministry of Finance, is in charge of the tendering of all state projects and orders - such as the Duqm free zone for industries. It is this board which assumed control over Oman Shipping Co. and ordered the building of its LNG and crude oil tankers.

The Central Bank is under the Finance Ministry's authority. However, it assumes some degree of autonomy granted by Sultan Qaboos. But it follows the sultan's orders. Hamood Sangour al-Zadjali, the Central Bank governor, has introduced a set of conservative lending policies, not allowing banks operating in the sultanate to borrow large amounts in foreign currency to finance their operations. He has not been allowing capital flows for speculative investments. These policies have enabled Oman to be relatively more insulated than some of its GCC neighbours from the global crisis which hit the financial world in 2008-09. Thus in early 2009, Zadjali said the Omani banking sector was strong enough to weather the crisis. Later he said the global crisis had no impact on Oman.

Zadjali has led an over-haul of the Central Bank's IT system, having worked with IBM since 2005 to implement new systems for the institution to speed up payments between banks. In 2006, Zadjali opted to implement an automatic clearing system at the Central Bank to bulk-process electronic credit and debit transfers.

Oman has no plans to join the proposed GCC single currency. In early 2008 Zadjali said: "Oman is not going to join the currency union", noting that a weakened US dollar then had accounted for about a fifth of Oman's inflation - at the time running at 7.6%. However, he said maintaining stability in its peg to the dollar was important as it helped to attract foreign investment as it removed currency risks.

Oman has always prided itself on its independence. Its culture, history and geography set it apart from its GCC neighbours. And the news in February 2007 that Muscat had decided to withdraw from GCC plans to establish a single currency was further evidence of the sultanate's commitment to chart its own course.

As one of the smallest GCC economies, Oman's absence will not impact significantly on the economic viability of the union, though it under-cuts its political credibility.

Oman's withdrawal highlighted the GCC plan's central stumbling block: getting members to surrender sovereignty over monetary policy to an over-arching authority. But despite urgings from the UAE in particular to reconsider, the sultanate remains resolute that it will not join the monetary union because its development goals prevent it from meeting the convergence criteria.

Zadjali in 2007 said meeting budget deficit and public debt convergence criteria were particular concerns, and opting out of a single currency was "based on a realistic assessment of our national interest". Oman has thus put it economic autonomy over deepening regional integration. It is an economic decision and not one taken against its GCC neighbours.

Ekhart Woertz, economics programme manager at the Gulf Research Centre, in April 2007 said of Oman: "By withdrawing, it has a clear agenda to follow its development plans and encourage non-hydrocarbons growth. Its interests are different [from its GCC neighbours] regarding interest rates and the devaluation of the dollar".

Oman, however, remains part of the GCC's customs union. It is still part of the GCC] negotiations with other blocs.
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Publication:APS Review Downstream Trends
Geographic Code:7OMAN
Date:Feb 22, 2016
Previous Article:Oman - Saleh Muhammad Al-'Alawi.
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