Inflation rate at 2.09 per cent

MUSCAT: Notwithstanding the recent improvement in oil prices, economic activity in the Sultanate of Oman is projected to be fairly subdued. The Government and the Central Bank of Oman (CBO) have taken several steps to face the challenges. Ensuring adequate liquidity in the system, rationalisation of government spending and augmenting non-oil revenues have been in focus. Average annual inflation based on CPI for the Sultanate during January- February 2017 stood at 2.09 per cent mainly due to revision in energy prices, transport costs, education and other user fees. The sharp drop in fiscal revenue outstripping the reduction in fiscal expenditure during 2016 led to the widening of the fiscal deficit. With the current account in the balance of payments also facing pressure, the CBO ensured that the foreign exchange reserves in its balance sheet remained healthy.