Oman will more than double public spending over the next five years to 30 billion Omani rials (Dh286.18bn) as it seeks to stimulate growth and generate jobs for young nationals.
The sultanate also unveiled a record budget for this year, a 9 per cent increase on last year to 8.13bn rials. Education, transport and health will account for the bulk of spending under a five-year plan unveiled yesterday.
The proposals are intended to promote an annual GDP expansion of 5 per cent while keeping inflation under control.
"This gives us a clear sense of policy direction and suggests that the government is committed to an expansionary stance," said Liz Martins, a senior economist for HSBC Middle East. "The plans are broadly affordable, barring a major downturn in oil prices. We expect continued surpluses for the government."
GCC states are drawing up their budgets for the coming year and beyond. Oman and Qatar are expected to push up their respective expenditure further.
Oman is focused on expanding its private sector by investing in infrastructure projects and creating employment for its growing population.
As one of the smallest of the Gulf oil producers, it is also looking to expand its oil and gas production to raise state revenue and encourage investment.
About 6bn rials from the plan would be spent within the oil industry, the economy minister Ahmed bin Abdulnabi Macki was cited as saying by the official Oman News Agency.
The plan is based on an average oil price of US$59 a barrel and an oil output of 897,000 barrels per day (bpd) during the five-year period, the agency said. Output was at about 875,000 bpd last month.
Oman weathered the impact of the global financial crisis as robust government policies and an increase in oil production helped to prevent the economy from decelerating too rapidly. Rising oil output and a recovery in crude prices have ensured Oman's fiscal expansion plans have remained intact.
As a result, the economy easily outperformed growth forecasts in its previous five-year plan. GDP growth was 7.3 per cent in 2009 and 6.1 per cent last year, according to government estimates.
Under the new plan, average GDP growth of 5 per cent is forecast during the period. Average inflation is projected at 4 per cent.
Roads, ports and airports will account for a large bulk of the expenditure rolled out in the coming years.
Another priority will be improving education and skills training for Omanis as part of an overall drive to create employment among nationals. Oman's population has grown 15 per cent in the past seven years, and particularly strongly among the young, the results of the latest census conducted by Oman showed last month.