MINISTER REAFFIRMS ADHERENCE TO MARKET PRINCIPLES

UNCLAS MUSCAT 000978 SIPDIS SENSITIVE SIPDIS STATE FOR NEA/ARP COMMERCE FOR ITA COBERG TREASURY FOR OTA VALVO E.O. 12958: N/A TAGS: ECON EFIN MU SUBJECT: MINISTER REAFFIRMS ADHERENCE TO MARKET PRINCIPLES REF: MUSCAT 860 ¶1. (U) On October 7, Commerce and Industry Minister Maqbool bin Ali Sultan addressed the Oman Journalists' Association (OJA) in the midst of calls from the public for government action to halt general price increases, especially with regard to housing and food. Aside from the recent Council of Ministers' decision to limit rent hikes for the cities of Muscat and Sohar to 15% for 2007 and 2008, the Minister reaffirmed the government's position not to set price caps for food and other commodities for fear of spurring a black market. Maqbool acknowledged that the maintenance of the dollar peg was helping to create imported inflation, as the index rose to 6.5% in August. Nevertheless, he reiterated the Central Bank's stance that the currency arrangement would remain unchanged and noted that a weaker rial had the dual benefit of attracting more foreign investment to the Sultanate while making Omani exports cheaper for foreign buyers. ¶2. (SBU) Comment. The OJA event, well-attended by Omanis and Arab expatriates, entailed an open and detailed discussion between the media and the minister on the government's economic policies. Maqbool came well-prepared, and offered in-depth responses to challenges from participants. He used the public forum to stress adherence to free market principles, echoing statements by National Economy Minister Ahmed bin Abdul Nabi Macki in previous public engagements. Maqbool's willingness to appear before the media association reflects a recent trend by the economy and commerce ministries towards more openness and transparency. This, in turn, has generated some critical reporting from the new Arabic daily "Azzamn," which questioned the Minister's hands-off approach in dealing with the price hikes. Of further interest is that the Ministry of Interior, which approves "Azzamn" articles, allowed it to be published. End Comment. GRAPPO