ChallengesChallenges

• Weak Prospects For Economic Weak Prospects For Economic Growth Growth

• High Population Growth High Population Growth

• Poor Development of Human Poor Development of Human Resource And Infrastructure Resource And Infrastructure

• Fragile Social Protection Mechanism Fragile Social Protection Mechanism

PRS PillarsPRS Pillars

• Achieving Economic Growth Achieving Economic Growth

• Human Resources Development Human Resources Development • Improving InfrastructureImproving Infrastructure

• Ensuring Social Protection Ensuring Social Protection • Improving Governance And Improving Governance And

Broadening Participation & Broadening Participation & Collaboration Collaboration

SLOW ProgressSLOW Progress

• The Events Of 9/11 And The War In Iraq The Events Of 9/11 And The War In Iraq • Acts Of Terrorism In YemenActs Of Terrorism In Yemen

• Slow Economic Reforms Slow Economic Reforms • Limited Returns From Partial Limited Returns From Partial

Membership In The GCCMembership In The GCC

• Partial Knowledge And Commitment To Partial Knowledge And Commitment To Carrying Out PRS Goals Carrying Out PRS Goals

ItemItemAverageAverageAchievementAchievementTargetTarget

2001200120022002AverageAverage20032003**

20042004**

AverageAverage2003200320042004

GDPGDP4.94.94.74.74.84.83.33.33.63.63.53.53.73.75.35.3

Per capita Per capita GDPGDP

1.41.41.51.51.41.40.10.1--0.20.20.10.10.50.52.12.1

*Provisional

Economic ProgressEconomic Progress

Economic ProgressEconomic Progress

ItemItemGrowthGrowthContribution Contribution to GDPto GDP

2001200120022002AverageAverage2003200320042004AverageAverage20012001200220022003200320042004

Crude OilCrude Oil1.61.61.01.01.31.33.43.4--1.61.6--2.52.5--15.315.314.814.813.813.813.213.2

Non-Oil GDP Of whichNon-Oil GDP Of which5.65.65.35.35.55.54.54.54.44.44.54.584.784.785.285.286.286.286.986.9

AgricultureAgriculture, , Forest, Forest, FishingFishing

6.056.05--0.10.13.03.03.83.83.53.53.73.721.621.620.620.620.720.720.620.6

ManufacturingManufacturing4.94.9776.06.04.54.54.14.14.34.310.110.110.310.310.410.410.510.5

Building & ConstructionBuilding & Construction4.84.82.92.93.93.94.24.23.63.63.93.92.12.12.12.12.12.12.12.1

Trading, Hotels & Trading, Hotels & RestaurantsRestaurants

4.84.812.112.18.58.55555558.58.59.19.19.29.29.39.3

Transportation & StorageTransportation & Storage6.16.19.39.37.77.74.84.84.24.24.54.511.211.211.711.711.811.811.911.9

Financing, Insurance, Financing, Insurance, Real estate & Business Real estate & Business ServicesServices

6.56.53.63.65.15.14.64.62.32.33.53.58.98.98.88.88.98.98.88.8

Government ServicesGovernment Services 4.04.05.25.24.64.64.44.45.45.44.94.921.421.421.521.521.721.722.122.1

Obstacles to GrowthObstacles to Growth

• Vulnerability To External Shocks Vulnerability To External Shocks • Failure of Promising Sectors To Achieve Failure of Promising Sectors To Achieve

Goals Goals • Investment Environment Investment Environment • Week InfrastructureWeek Infrastructure• Red Tape Red Tape • Manufacturing (Reliance on Imports, Manufacturing (Reliance on Imports,

Banking Sector, Family Businesses Banking Sector, Family Businesses • Fisheries (Legal Framework, Fisheries (Legal Framework,

overexploitation of Reserves, overexploitation of Reserves, Underdeveloped Systems Underdeveloped Systems

• Tourism (Security, Infrastructure, Weak Tourism (Security, Infrastructure, Weak PromotionPromotion

Effect of Economic Development on PovertyEffect of Economic Development on Poverty

ItemItemUrbanUrbanRuralRuralTotalTotalPercentage ChangePercentage Change1998-20031998-2003

UrbanUrbanRuralRuralTotalTotal

Food povertyFood poverty8.48.421.321.318.318.316.016.0--7.07.03.33.3

Poverty GapPoverty Gap0.40.41.01.00.90.980.980.9--80.780.7--880.00.0--

Severity of Severity of PovertyPoverty

0.10.10.10.10.10.185.785.7--95.095.0----94.194.1

Absolute PovertyAbsolute Poverty21.121.145.745.740.140.131.531.5--1.61.6--4.14.1

Poverty GapPoverty Gap1.11.12.72.72.32.386.686.6--81.681.6----82.682.6

Severity of Severity of PovertyPoverty

0.10.10.30.30.20.296.996.9--95.595.5----96.696.6

Consumption & SavingConsumption & Saving ItemItemActualActualAchievementAchievementTargetTarget

200120012002200220032003200420042003200320042004

Total final ConsumptionTotal final Consumption80.280.280.080.079.579.574.174.184.984.986.386.3

PrivatePrivate65.765.764.464.463.463.460.160.167.267.268.668.6

PublicPublic14.514.515.615.616.116.114.114.117.717.717.717.7

Total InvestmentTotal Investment18.918.920.820.822.122.123.023.024.624.625.825.8

Domestic ConsumptionDomestic Consumption99.299.2100.8100.8101.6101.697.297.2109.109.55

112.1112.1

Balance Of Goods & Balance Of Goods & ServicesServices

0.80.80.80.8--1.61.6--2.82.89.59.5--12.112.1--

Exports of Goods & Exports of Goods & ServicesServices

36.636.638.438.438.138.139.039.032.132.128.628.6

Imports of Goods & Imports of Goods & ServicesServices

35.835.839.139.139.739.736.236.241.641.6--40.640.6--

Net Income Of Production Net Income Of Production FactorsFactors

6.56.5--7.37.3--8.58.5--9.09.0--5.45.4--3.83.8--

Investment and Business ClimateInvestment and Business Climate IndicatorsIndicators200220022003200320042004Region's Average Region's Average

for 2004for 2004

-1-1 Starting Up ActivitiesStarting Up Activities

Number Of ProceduresNumber Of Procedures--131312121010

Number Of Working Days RequiredNumber Of Working Days Required9595969663633939

Cost Of Accomplishing Procedures % of per capita Cost Of Accomplishing Procedures % of per capita incomeincome

3173172642642692695151

Minimum Capital Required % of per capita incomeMinimum Capital Required % of per capita income))280328031717171715611561856856

-2-2 Registration Of OwnershipRegistration Of Ownership

Number of ProceduresNumber of Procedures----6666

Number Of Working Days RequiredNumber Of Working Days Required ----21215454

Cost Of Registration )% of per capita assetsCost Of Registration )% of per capita assets))----3.93.96.86.8

3-Executing Contracts3-Executing Contracts

Number Of ProceduresNumber Of Procedures --272737373838

Number Of Working Days RequiredNumber Of Working Days Required --240240360360437437

Cost )% of per capita incomeCost )% of per capita income)) --0.50.510.510.517.917.9

44-Liquidation Of Business-Liquidation Of Business

Liquidation Time )yearsLiquidation Time )years))--2.42.4333.93.9

Liquidation Cost )% of AssetsLiquidation Cost )% of Assets))--44881313

ItemItemActualActual Proposed Proposed BudgetBudget

PRSPRS TargetTarget

2002200220032003**20042004200520052003200320042004

Surplus / Deficit NetSurplus / Deficit Net))))--0.80.8--4.34.3--1.91.9--3.03.0--------

Surplus / Deficit Surplus / Deficit )Gross))Gross)

--0.50.5--4.44.4--2.82.8--4.34.3 3.03.04.04.0

Net Foreign FinanceNet Foreign Finance--0.30.30.10.10.80.83.03.01.31.31.31.3

Net Local FinanceNet Local Finance0.80.84.34.31.91.91.31.31.71.72.72.7

Total RevenuesTotal Revenues32.032.033.333.335.235.2------

Total of ExpendituresTotal of Expenditures32.832.837.637.637.137.133.633.635.235.234.534.5

Status of the BudgetStatus of the Budget (% of GDP)(% of GDP)

Status of the BudgetStatus of the Budget

ItemItemActualActualPRS TargetsPRS Targets

200220022003200320042004**2003200320042004

Public ServicesPublic Services6.76.79.09.08.18.1----

DefenseDefense7.17.16.66.64.94.96.56.56.36.3

Safety & Public OrderSafety & Public Order 2.42.42.72.72.42.4----

Economic AffairsEconomic Affairs5.05.07.17.13.53.5----

Environment ProtectionEnvironment Protection0.00.00.60.60.80.8----

Housing, Local Community AffairsHousing, Local Community Affairs1.91.92.22.21.61.6----

Entertainment, Culture & ReligionEntertainment, Culture & Religion0.50.50.60.60.70.7----

Community Social ServicesCommunity Social Services,,Of whichOf which

8.28.28.08.08.68.612.112.112.812.8

HealthHealth1.31.31.51.51.61.61.91.92.12.1

EducationEducation6.86.86.46.46.86.89.19.19.49.4

Social ProtectionSocial Protection0.10.10.10.10.10.1----

*Estimate

s

Monitoring IndicatorsMonitoring Indicators

Population Population ))Millions)Millions)18.318.320.820.819.719.7

FertilityFertility 5.95.95.35.36.26.2

Maternal Mortality Maternal Mortality ))per 100,000 birthsper 100,000 births))351351314314365365

Infant Mortality Infant Mortality ))Per 1,000Per 1,000))67.867.861.561.584.384.3

> 5 > 5 yrsyrs. . Child Mortality Child Mortality ))Per 1,000Per 1,000))94.194.184.184.199.899.8

Control of Population GrowthControl of Population GrowthPopulation Growth RatePopulation Growth Rate 3.53.53.13.13.023.02

UrbanUrban29.929.926.126.1

RuralRural45.145.141.641.6

Increased Health Care CoverageIncreased Health Care Coverage Coverage Coverage ))PercentagePercentage))TotalTotal505063.863.86363

UrbanUrban808080808080

RuralRural252539.639.64141

Increase in School EnrollmentIncrease in School EnrollmentTotalTotal626267.667.668.968.9

UrbanUrban77.277.281.281.28282

RuralRural43.943.952.752.753.353.3

GoalGoal IndicatorsIndicatorsBase Base year year datadata

20042004 plannplanneded

20042004 ActualActual

InfrastructuresInfrastructures Increase in Water and Sanitation Increase in Water and Sanitation Services CoverageServices Coverage

Percentage of Population with Water from Public Percentage of Population with Water from Public NetworkNetwork

TotalTotal57.457.464.564.5

UrbanUrban6464686862.462.4

RuralRural5555636333.833.8

Percentage of Population with Sanitation Percentage of Population with Sanitation ServicesServices

TotalTotal6.26.27.87.8

UrbanUrban333340403838

Increase Coverage of Electricity Increase Coverage of Electricity ServiceService

Percentage of Population with Power from the Percentage of Population with Power from the National GridNational Grid

TotalTotal303038.538.53737

UrbanUrban65.765.796.996.98888

RuralRural171722222121

Electricity Losses Electricity Losses ))percentagepercentage))3838282825.825.8

Connecting Rural Areas to Connecting Rural Areas to Markets, and Easy Access to Markets, and Easy Access to Services through Expansion of Services through Expansion of Road NetworkRoad Network

Length of Asphalted Roads Length of Asphalted Roads ))kmkm))6,5866,5862,0502,0501,4361,436

Length of Gravel Roads Length of Gravel Roads ))km)km)3,9153,9151,7501,750--

Length of Rehabilitated Asphalt Roads Length of Rehabilitated Asphalt Roads ))km)km)--233233256256

Length of Improved and Strengthened Roads Length of Improved and Strengthened Roads ))kmkm))--210210--

Length of Roads Undergoing Routine MaintenanceLength of Roads Undergoing Routine Maintenance --2,1432,1437,6177,617

Social Protection & GenderSocial Protection & Gender

Reinforce Role of Reinforce Role of Social welfareSocial welfare

Number of BeneficiariesNumber of Beneficiaries 450,160450,160570,160570,160650,000650,000

Expansion of Pension Expansion of Pension CoverageCoverage

BeneficiariesBeneficiaries GovGov. . and Puband Pub. . SecSec

415,000415,000450,949450,949474,879474,879

Private SectorPrivate Sector45,00045,00066,00066,00071,10371,103

PensionersPensioners GovGov. . and Puband Pub. . SecSec

40,47340,47356,08956,08959,93259,932

Private SectorPrivate Sector1,1201,1205,7285,7282,2602,260

Narrowing Gender GapNarrowing Gender Gap Gender Development IndexGender Development Index 0.4280.428--0.4270.427

GovernanceGovernanceInstitutional Assessment IndicatorsInstitutional Assessment Indicators

20012001200220022003200320042004

Average for Management of the EconomyAverage for Management of the Economy4.34.34.34.34.84.84.24.2

Commercial Policy and Banking PolicyCommercial Policy and Banking Policy4.54.54.54.555--

Financial StabilityFinancial Stability2.52.5333.53.5--

Effectiveness of the Banking System and Effectiveness of the Banking System and Resource MobilizationResource Mobilization

2.52.52.52.52.52.5--

Competitive environment for Private SectorCompetitive environment for Private Sector333333--

Commodity Markets and FactorsCommodity Markets and Factors of Productionof Production333.53.53.53.5--

Average of Structural PoliciesAverage of Structural Policies333.23.23.33.33.23.2

Average of Social Indicators & EqualityAverage of Social Indicators & Equality2.92.93.13.13.53.533

Property Rights and GovernanceProperty Rights and Governance22112.52.52.52.5

Fiscal and Budget Management QualityFiscal and Budget Management Quality3.53.53.53.53.53.533

Effectiveness of Revenue MobilizationEffectiveness of Revenue Mobilization3.53.53.53.53.53.53.53.5

Quality of Public Sector ManagementQuality of Public Sector Management33333.53.533

Transparency, Accountability & corruption in Transparency, Accountability & corruption in the Public Sectorthe Public Sector

222.52.5332.52.5

Average of Public Sector Management and Average of Public Sector Management and InstitutionsInstitutions

2.82.82.72.73.23.22.92.9

Overall Average of Institutional AssessmentOverall Average of Institutional Assessment3.23.23.33.33.63.63.33.3

GovernanceGovernance (1 Of 5) (1 Of 5)

• Judiciary :Judiciary :1.1. InfrastructureInfrastructure

2.2. Training And Rehabilitation Training And Rehabilitation

3.3. Resuming admissions to The Higher Resuming admissions to The Higher Judicial Institute Judicial Institute

4.4. Cutting Short Court Procedures Cutting Short Court Procedures

• Combating Corruption :Combating Corruption :

1.1. Establishing A Supreme Committee Establishing A Supreme Committee

2.2. Drafty A Matrix Addressing Drafty A Matrix Addressing Corruption Issues Corruption Issues

3.3. Cabinet Issued Resolution And Cabinet Issued Resolution And Orders To Implement The MatrixOrders To Implement The Matrix

GovernanceGovernance (2 Of 5) (2 Of 5)

• Civil Service:Civil Service:

1.1. Restructuring 7 Administrative Restructuring 7 Administrative Units Units

2.2. Eliminate Double Dippers And Eliminate Double Dippers And Ghost Names Ghost Names

3.3. Referral To Retirement Referral To Retirement

GovernanceGovernance (3 Of 5) (3 Of 5)

• Enhancing Human Rights :Enhancing Human Rights :

1.1. Establishing A Ministry Of Human Establishing A Ministry Of Human Rights Rights

2.2. Presenting For Discussion Several Presenting For Discussion Several Reports On The Implementation Of Reports On The Implementation Of International ConventionsInternational Conventions

GovernanceGovernance (4 Of 5) (4 Of 5)

GovernanceGovernance (5 Of 5) (5 Of 5)

• Decentralization & Local Authority:Decentralization & Local Authority:

1.1. Complete Construction Of Complete Construction Of Government Complexes Government Complexes

2.2. A National Plan For Training And A National Plan For Training And Rehabilitation Of Local Administration Rehabilitation Of Local Administration Staff Staff

3.3. Forming A Higher Committee And A Forming A Higher Committee And A Technical Committee To Support And Technical Committee To Support And Enhance Decentralization Enhance Decentralization

Challenges and Challenges and Directions for the Directions for the

FutureFuture

Viability The PRSViability The PRS 1.1. Supporting & Directing Planning Supporting & Directing Planning

Towards Development Challenges Towards Development Challenges And Poverty Reduction And Poverty Reduction

2.2. Enhancing Monitoring & Follow Up Enhancing Monitoring & Follow Up Mechanisms Mechanisms

3.3. Expanding Participation Expanding Participation Through Through The Various Phases of Preparation, The Various Phases of Preparation, implementation, monitoring & implementation, monitoring & Follow UpFollow Up

4.4. Linking Financial Resource To Linking Financial Resource To Development Plans Development Plans

20052005 Macroeconomic FrameworkMacroeconomic Framework 2005 Estimates

(YR mn)% of GDP PRS Target

(% of GDP)

Final consumption,Of which:

1,762,07570.886.9

Public consumption367,85414.817.9

Private Consumption1,394,22156.068.9

Gross Investment673,86427.126.0

GDP at market price Real GDP Growth %

Non oil growth %

2,488,0772.94.1

100.0--

100--

National savings490,95219.723.3

Trade Balance--0.3-8.1

Current Balance--0.6-2.7

20052005 budgetbudget ItemItem20052005

PRS TargetPRS Target 20052005 Proposed Proposed

BudgetBudgetDeviation (Percentage Deviation (Percentage

PointPoint))

Total current Revenues & GrantsTotal current Revenues & Grants29.529.528.428.41.11.1--

Total RevenueTotal Revenuess28.728.727.727.71.01.0--

Oil & GasOil & Gas16.216.218.118.12.12.1

Non Oil RevenuesNon Oil Revenues12.512.5----

TaxTaxeses10.310.37.77.72.62.6--

CustomsCustoms3.13.12.12.11.01.0--

NON Tax RevenuesNON Tax Revenues2.32.32.02.00.30.3--

Grants cashGrants cash))0.80.80.70.70.10.1--

Total ExpenditureTotal Expenditure33.233.233.633.60.40.4--

Current ExpenditureCurrent Expenditure25.425.423.423.42.02.0--

Civil Salaries & WagesCivil Salaries & Wages9.39.310.710.71.41.4

Goods & servicesGoods & services2.92.93.43.40.50.5

Maintenance & OperationMaintenance & Operation0.40.40.50.50.10.1

Debt PaymentsDebt Payments2.62.62.92.90.30.3

Transfers & SubsidyTransfers & Subsidy3.63.66.06.02.42.4

Current TransfersCurrent Transfers3.53.52.72.70.80.8--

SubsidySubsidy0.10.12.02.01.91.9

Development ExpenditureDevelopment Expenditure7.87.87.97.90.10.1

Balance )including grantsBalance )including grants))3.73.7----4.34.30.60.6

Net Local FinancingNet Local Financing2.62.63.03.00.40.4

Net foreign FinancingNet foreign Financing1.11.11.31.30.20.2

Priority SpendingPriority SpendingItemItem20052005 TargetsTargets20052005 BudgetBudget

Total expenditure )million Rials)Total expenditure )million Rials)669669 , ,464464836,379836,379

Defence )% of GDP)Defence )% of GDP)6.06.05.15.1

Health )% of GDP)Health )% of GDP)**Investment expenditure in health )Mn/YR)Investment expenditure in health )Mn/YR)

2.22.212,84712,847

1.71.714,88614,886

Education )% of GDP)Education )% of GDP)**Investment expenditure )Mn/YR)Investment expenditure )Mn/YR)

9.69.630,75930,759

7.17.134,50634,506

Social Welfare Fund )% of GDP) )Mn/YR)Social Welfare Fund )% of GDP) )Mn/YR)1.41.428,23828,238

0.60.614,30614,306

Social Fund for Development )Mn/YR)Social Fund for Development )Mn/YR)13,50213,50213,04113,041

Civil Service Fund )Mn/YR)Civil Service Fund )Mn/YR)1,3001,3002,2602,260

Agriculture & Fisheries Production & Agriculture & Fisheries Production & Promotion Fund )Mn/YR)Promotion Fund )Mn/YR)

3,0003,00014,43114,431

Economic GrowthEconomic Growth17,66017,66036,33236,332

Human Resources DevelopmentHuman Resources Development43,60643,60639,29739,297

Enhancing InfrastructureEnhancing Infrastructure41,91541,915184,227184,227

• Directions For Future: Directions For Future:

• Enhancing Investment Climate And Enhancing Investment Climate And

Accelerating ReformsAccelerating Reforms

• Upgrading The Planning ProcessUpgrading The Planning Process

• Expanding Participation And Expanding Participation And Partnership Partnership

ENDEND