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Ethos Issue 6, Jul 2009
Crisis-proof Governance
Featuring: Mr Sa Bali Abas (Permanent Secretary, Prime Minister’s Office, Brunei);
Mr Sabir Said Al-Harbi (Director General, Economics Statistics,
Ministry of National Economy, Oman);
Mr Solomon Molebat si Sekwakwa (Permanent Secretary, Ministry of Finance &
Development Planning, Botswana)
The Ethos Roundtable brings together thought leaders and practitioners
to discuss key issues of interest to the public service. In this session,
three eminent participants in Singapore’s second Leaders in
Governance Programme reflect on the impact of the economic crisis
on their home countries, and their strategies for recovery.
How is the current global economic
crisis affecting your country, and how is
your government responding?
SA BALI: Brunei is an oil-producing
country. Crude oil and gas provide
approximately about 70% of GDP; almost
90% of our exports come from oil and
gas. Obviously, the dramatic drop in oil
prices from around $140 to around $40
has greatly reduced the revenue we have
been privileged to enjoy thus far. At the
same time, Brunei imports most of our
goods. So with the price of imported
goods ballooning, local inflation is also
going up. In order to counter this, we
have looked into tightening our fiscal
policies and being more prudent.
SABIR: Even in the oil-producing Arab
world, the impact of the crisis will
differ from country to country. Oman is
similar to Brunei: 40% of our GDP and
60% of government revenue come from
oil. So declining prices may affect public
finance. But even with current oil prices
at around $45 per barrel, oil-producing
countries such as Oman should do fine;
the past few years of high oil prices were
simply a bonus.
Our own industries have not been as
exposed to the crisis, and so the impact on
Oman has so far been limited. Certainly,
the stock market has declined by about
30%, but the Government’s efforts in
developing and growing the economy
remain unchanged. The Central Bank
of Oman is able to provide banks with
credit and liquidity if necessary, but so
far it has not been necessary.
Some sectors across the region have
been more directly affected, such as
construction and real estate. You see this especially in Dubai, where economic
growth has been led by construction
and property development. But Dubai
is still able to provide a $20-billion
stimulus package.
SEKWAKWA: Botswana is about the size
of France but with a small population,
so the cost of providing services is high.
We are among the largest producers of
diamonds in the world. When the crisis
hit, the demand for diamonds fell; since
the mineral sector contributes to 40%
of our GDP and 50% of our government
revenue, we were badly affected. A
second major source of revenue is
tourism, which has also been badly
affected by the crisis.
Nevertheless, revenue accumulated
in the past is helping to cushion the
effects of the downturn, and if the
turnaround comes in two to three years’
time, we should be fine.
But what we are concerned about now
is the global economic picture once the
turnaround arrives. Will things be the
same? Will people be buying diamonds
as they were before? We think it may
not be so, and adjustments will have
to be made. As public servants, we are
now occupied with thinking through
how best to reform the economy and
find new ways to drive it forward after
the crisis.
So the good years of the recent past
have allowed you to build up resources
that can now be used to deal with the
current crisis. What are your priorities in
deploying these resources?
SEKWAKWA: We want to develop an
economy that isn’t just focused on
dealing with the crisis; we need to
emerge stronger than before after the
downturn is over. So we are investing in
infrastructure and in people, building
capacity so that when the turnaround
comes, we are better placed. In doing
so, we also address the immediate
concern of keeping people employed. In
Botswana’s case, we are able to directly
generate and maintain employment
levels, since most sectors are dependent
on the government.
SABIR: The challenge all around the
world is indeed to be ready for the
upswing and to come back stronger
after a decline.
In Oman, we embarked, quite some
time back, on a policy of economic
diversification, in order to move away
from dependence on oil towards
income generation in other sectors
such as tourism, fisheries, gas and
petrochemicals. In recent years, oil has been declining as a proportion of
our GDP.
A special ministry was established
a few years ago to develop the tourism
sector. The government is also trying to
attract foreign investment, particularly
for tourism and other industries.
These new industries will stimulate
the economy, open up markets and
bring in new technology and expertise,
which will in turn stimulate our
business sector.
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