Week 1

Second Long Term Development Strategy (1996-2020)

During the first long term development strategy (1970-1995) the Sultanate has been able to accomplish significant achievements in all areas and dimensions of the comprehensive development. The development performance for the Sultanate depended in the first place on the supply of the oil resources, and then on the high level of government expenditure, high levels of investment and recruitment of large numbers of expatriate workers.

In spite of these achievements accomplished by the Sultanate during the period (1970-1995) through its dependence on this development style based on the four pillars indicated above. The continuance of development in the medium and long terms, in case of continuation of this development style, will be faced by a number of challenges due to its dependence on depleting resource. In addition to that, depending on these depleting resources will result in negative effects on the public finance, economic diversification processes, and saving and production. In general, study for and definition of the challenges, which will face the development path in the Sultanate, was achieved during 1995 as follows:

1. Increasing deficit in the general budget; a decline of financial reserves; levels o public debt that must not be exceeded, and instituting a mechanism for achieving equilibrium in the public finance.
2. The dependence of the national economy on single depletable resources (oil), which is affected mainly by external economic and political factors.
3. The expected gradual decrease in the oil reserve during the coming twenty-five years.
4. The prominence of the government role in the goods and services production fields, which limit the opportunities available for the private sector in these fields.
5. The lack of certain laws and systems for provision of a suitable environment for the growth and diversity of private sector activities.
6. The weak integration between the oil sector and other production and services sectors. All production and services sectors are characterized by low efficiency and poor quality, which reduces their ability to compete at international level.
7. The poor production efficiency in the government systems and inefficient utilization of available resources.
8. The low level of private saving and investment rates and the increasing consumption tendencies.
9. The existing imbalance in the labour market, including the low level of national labour participation and the expansion in employment of expatriate labour.
10. The poor productivity of human resources, the low status of some professions and handicrafts, in addition to their insignificant participation in the national economy.
11. The incapability of national labour force to cope with the rapid developments in the Technological field.

Besides this, the emergence of the features of the new world order, that is centred around the economic, commercial and technical competition, adopting market mechanisms, economic liberalization and promotion of private sector role, will increase the impact and strength of the aforementioned challenges which will face the development process in the Sultanate.

In order to face these challenges and strive to maximize the benefit from the positive developments on the national economy's structure during the period (1970-1995) as well as from the natural resources of the country, the distinguished geographical location of the Sultanate, and the chances offered by the communication revolution and economic globalization, aiming for sustainable development and improving the quality of life for the Omani individual at high continuous accelerating rates, the Sultanate adopted on the first of January 1996, in accordance with the Royal Decree No. (1/96), the long term development strategy for the period (1996-2020) represented in the Vision for Oman's economy: Oman 2020.

The long-term development strategy for the period (1996-2020), aims first at maintaining the per capita income at its present level, as a minimum, and strives to double it in real value by 2020. It also aims to achieve economic stability and fiscal balance, provide favourable conditions for economic advancement through utilization of oil and gas returns to accomplish sustainable and renewable economic diversification, together with provision and improvement of basic health and education services. The strategy's objectives also include the training of Omani citizens, promotion of their skills, as well as adoption of policies aiming for promotion of the citizen living standard. In general the strategy aims for achieving sustainability and fiscal balance, and introducing substantial changes in the national economy's structure to diversify the production base, further the private sector role in the national economy, and develop the human resources.

The achievement of the long term strategy objectives depends on the following basic dimensions approved by the aforementioned Royal Decree (1/96):

1. Developing human resources and upgrading the skills of Omani nationals to keep abreast of Technological process to manage the dynamics of this progress in a highly efficient way, and face the ever-changing domestic and global conditions.
2. Creating the conditions for stable macro-economic climate with the aim of developing a private sector capable of the optimal use of the human and natural resources of the Sultanate, using methods characterized by efficiency and conservation of environment.
3. Encouraging the establishment of an effective and competitive private sector, and the consolidation of mechanism and institutions that will enhance joint government and private sector visions, strategies and policies.
4. Providing appropriate conditions for the realization of economic diversification and working toward the optimum utilization of the natural resources and the geographically distinct location of the Sultanate.
5. Enhancing the standard of living of the Omani citizen and working toward the reduction of inequality between regions and different income categories the government will also ensure that the citizen reap the fruits of the development process.
6. Preserving the gains achieved in the past twenty five years safeguarding and developing them, along with the completion of the necessary basic services.