Oman has credit problem

Press, Volume CXV, Issue 33775, 22 February 1975, Page 9

Oman has credit problem

(By

ERIC POACE

of the "New York Times” through N.Z.P.A.,

MUSCAT (Oman), February 16.

The whispering is spreading under the ceiling fans in Muscat parlours and foreign bankers have been moving through the arcaded ministries, briefcases in hand.

The Arabian Sultanate of Oman is finding itself short of funds these days, which is embarrassing for the Government of Sultan Qabus Bin Said since it has been receiving oil revenues at a rate of almost SUSIOOO million a year with fewer than one million subjects to spend the money on.

No public comment has been made by the Government on the subject lately nor by Sultan Qabus, an absolute monarch who serves as his own Minister of Finance.

But highly-placed supporters of the Sultan acknowledge that the Government is overdrawn at one bank by several million dollars, is having a cash flow problem, and has been warned by some bankers that they might find it difficult to extend more credit unless the country mends its freespending ways. Critics of the Government assert in private that the situation is urgent.

“It is a very delicate problem indeed," one high ranking source murmured over his cup of bitter coffee. It is particularly so because of the uncertain state of the world oil market, because of Oman’s strategic position at the mouth of the Persian Gulf and because of the reputation for extravagance that various Arab aristocrats have earned in the past.

Sultan Qabus is said to have no weaknesses more unseemly than a passion for collecting phonograph records. But he has sometimes been spectacularly generous since he seized power in 1970 from his arch-conservative father, Sultan Said ■ Bin Taimur,

It is not merely that his air force has dropped free bonbons to the children of his realm. Nor that he has provided free outdoor colour television sets for a populace that was formerly forbidden even to go out at night without carrying lanterns to discourage evil doing. But Sultan Qabus has embarked on a vast programme of construction ranging from scores of new schools and other public buildings to a huge multi-coloured palace costing at least SUSIS million that has been rising over the waterfront of this port. Lately, he has been spend-

ing mony on his police and 12,000-man Armed Forces, sources said, at a rate of roughly SUSSOO million a year. The money has been going largely for Rapier ground-to-air missiles and other advanced equipment.

Some Government* critics complain privately that SUSSOOm a year is too much to spend on a military establishment that is currently fighting nothing more than a band of several hundred Marxist-led rebels near the southern frontier.

But the Sultan’s supporters, including his former military commander, MajorGeneral T. M. Creasey, have said that Oman needs a varied arsenal of modem weapons to cope with many eventualities. They contend that the high outlays can be credited in part for Oman’s recent successes in curbing the revolt.

The sources report that Sultan Qabus instructed his Ministers last week not to increase their expenditures and not to arrange any new contracts for construction and other projects in the immediate future. He declared the next 12 months to be a period of “consolidation” during which Government spending would be reassessed. It is at the Sultan’s invitation, his supporters say, that a team of foreign bank-

ers has been visiting Oman in recent days to suggest means for controlling spending and to work on economic plans for the rest of this decade. The budget for 1975 has not yet been made public, but the Sultan’s admirers say that the Government’s revenues from oil in 1974 were between SUS9OOm and SUSIOOOm not counting the amount, said to be less than 10 per cent, that the Sultan took for himself. The Government’s expenditures were a trifle less, leaving a surplus for the year of less than SUS3Om. Government expenditures this year are expected to be between SUSI2OOm and SUSI3OOm and oil revenues are expected to be SUSI2OOm, assuming that Oman’s oil production and world oil prices are not reduced.