Oman’s Progress Not Without a Price : Mideast: Its five-year plan calls for diversification to reduce dependence on oil supplies.

Oman is preparing for the day when it no longer has the oil wealth that transformed it over the last 20 years from a backwater into a glittering jewel in the desert.

Six-lane highways crisscross sandy wasteland and mountains that for centuries could only be traversed by camel caravans. The capital, Muscat, is a concrete-and-glass testimony to modernity.

But progress is not without its problems. Oman’s major revenue earner, crude oil, is forecast to run out in the next 20 to 25 years.

The sultanate’s population is expected to double within two decades, placing strong pressures on resources. Water supplies are already strained by extensive agricultural and human consumption.

Oman, at the mouth of the Persian Gulf, has a population of nearly 2 million, including more than 320,000 expatriate workers. Its annual population growth rate is 3.8%, one of the highest in the world.

The Omani government has no official policy of birth control, and diplomats and financial analysts in Muscat said the authorities were trying to lay the groundwork for industry and services to cope with the growing population.

“The present steep exponential growth, according to experts, will increase our population, if unchecked, to almost double its present levels in 18 to 20 years,” leading Omani businessman Kamal Sultan said in a recent article.

Better health care over the last 20 years has significantly lowered the infant mortality rate and raised life expectancy to 56 years in 1988 from 38 years in 1960, Sultan said.

He said that in some parts of Oman families have 12 to 15 children. More than half of all Omanis are younger than 15.

“Water, oil and manpower are the three important commodities for Oman,” Mohammed Bin Musa al-Yousef, secretary-general of Oman’s Development Council, said in an interview.

He said Oman’s five-year development plan for 1991-95 calls for diversification to reduce dependence on oil, which now accounts for 80% of government revenue.

Although the government is spending large sums to find more oil, officials here say Oman lacks the enormous reserves of neighboring Saudi Arabia.

Yousef said agriculture, fishing, industry, mining and services were the main sectors to be developed to boost non-oil income and create employment.

In the five-year plan, the government estimated an 11.1% growth rate in non-oil sectors, while total gross domestic production was seen growing by an average 6.3%.

“We can absorb any number of (Omani) school leavers into the job market at least until the year 2005,” Yousef said.

Experts say many Omanis are not willing to take up menial jobs held by expatriates.

“At the moment when we expand the economy we have to rely on expatriate labor more and more,” Yousef said.

But the government was striving to create conditions for Omanis to apply for jobs in the private sector and to encourage the private sector to employ Omanis.

The population increase is putting pressure on Oman’s limited water resources, mainly drawn from underground reservoirs.

Yousef said the government would oversee the use of water resources and would introduce more efficient irrigation methods in agriculture. It would also study ways of improving underground and above-ground water reserves.