News on Oman's secret cyclone, our new taxation plan, and naughty Iranians

The International Monetary Fund, or IMF, just released its latest annual Public Information Note [PIN] following discussions with the Oman Government. Apart from the stuff about banking and inflation, and how the Government needs to use fiscal policy to control it (ie the Government needs to rein back its growth in spending), there were two real nuggets.

The first highlights the very strange way last year's Cyclone Gonu is reported here.

Here’s the Oman Press version of the opening paragraph, as printed in the outstanding Times of Oman

IMF Praise for Oman growth
Oman’s economic performance during 2007 was strong. The economy withstood well the impact of last year’s unusual weather conditions and real GDP grew by 6.4 per cent, supported by high oil prices and rapid growth of non-hydrocarbon sectors such as petrochemicals, trade, and transport and communications, the International Monetary Fund (IMF) said in a recent report on Oman.

Well, actually, that’s not quite true, is it Times Of Oman, because that’s not what the International Monetary Fund (IMF) actually said in their recent report on Oman. Here’s the IMF version

Oman's economic performance during 2007 was strong. The economy withstood well the impact of the June cyclone and real GDP grew by 6.4 percent, supported by high oil prices and rapid growth of non-hydrocarbon sectors such as petrochemicals, trade, and transport and communications.

Note how The Times (and all other Omani papers) have changed June Cyclone to last year’s unusual weather conditions? It was always a bit Orwellian how, sometime later last year, all mention of a cyclone, Gonu, and the cause of the damage it did was replaced with the magically semantic phrase unusual weather.

The second piece, again totally unhighlighted by Oman’s extremely perceptive press corps, was that Oman is apparently planning to institute a value added taxation system.

Directors called on the authorities to restrain the growth of wages and transfers, phase the implementation of lower-priority projects. They encouraged the authorities to reduce over time the implied subsidy on petroleum products, and supported efforts to increase non-oil revenues through the introduction of a value-added tax.

Hmmm. A value added tax, also known as a goods and services tax, will be extremely regressive. That means that families who spend most of their income will face a much higher effective marginal tax rate than rich families who either save and invest money or spend it overseas. Perhaps Oman will choose to implement a more distorting (and more expensive to administer) VAT whereby food for example is excluded. Lets see. But interesting that we have to find out about this through the IMF...

Iranians caught supplying Iraqis with arms.
Well, no surprise there I guess. The Americans have been claiming since last year that the road-side explosive devices being used had reached levels of sophistication that indicated Iranian military support. It will be interesting to see how the Gulf countries react to clear proof of active Iranian support for the insurgency in Iraq.

Iraq shows proof of Iranian support for militants

BAGHDAD An Iraqi delegation in Iran has confronted Iranian security officials with evidence that Teheran is providing support for militias battling Iraqi government forces, an Iraqi official said on Friday.

"They presented a list of names, training camps and cells linked to Iran," Haidar Al Ibadi, a member of Iraqi Prime Minister Nuri Al Maliki's Dawa party, said.

"The Iranians did not confess or admit anything. They claim they are not intervening in Iraq and they feel they are being unfairly blamed for everything going on Iraq," he said of the talks, which took place on Thursday. Ibadi said he had been in contact with the delegation.

Washington has long accused Teheran of backing militias, particularly cleric Moqtada Al Sadr's Mahdi Army, providing them with weapons, funding and training. It has displayed some of the weapons, including rockets and mortars.

The Iraqi government, however, has generally been more restrained in its criticism of its neighbour, which denies the charges and says it supports the government.

The US military said this week that "very, very significant" amounts of Iranian weaponry had been found in Basra and Baghdad during offensive against militants. Some of those arms were made in 2008, a senior US military official said on Friday.

The official, who spoke on condition of anonymity, said there had been a "sea change" in Baghdad's view of Iranian activity in Iraq since the discovery of the weapons.

"Basra changed it for the Iraqis. I'm not sure they believed it before. But they went to Basra and saw it first hand," he said.