## OMAN: STAFF REPORT FOR THE 2025 ARTICLE IV CONSULTATION

## Source details

**Canonical URL:** [OMAN: STAFF REPORT FOR THE 2025 ARTICLE IV CONSULTATION](https://www.imf.org/-/media/files/publications/cr/2026/english/1omnea2026001-source-pdf.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/cr/2026/english/1omnea2026001-source-pdf.pdf.md)
- [Structured JSON version](/-/media/files/publications/cr/2026/english/1omnea2026001-source-pdf.pdf.json)

---

### Recent developments
- Real GDP growth: 1.6 percent in 2024; 2.3 percent (year on year) in 2025H1.
- Real nonhydrocarbon GDP: 3.3 percent in 2024; 3.5 percent (year on year) in 2025H1.
  - Nonhydrocarbon expansion driven by manufacturing, wholesale and retail, logistics, construction, agriculture and fishing, tourism, and logistics.
- Real hydrocarbon GDP contracted in 2024 due to OPEC+ oil production curbs.
- Inflation (headline): 0.6 percent in 2024; 0.9 percent during January–October 2025.
- Labor market:
  - Employment: +6.7 percent in 2023; -0.5 percent in 2024; +1.1 percent at end-2025Q3.
  - Unemployment rate: 3.3 percent in 2024 (3.2 percent in 2023).
  - Youth unemployment (ages 15–24): 12.5 percent.
- Financial Sector Assessment Program (FSAP) 2025: banking system resilient with ample capital and liquidity buffers and robust profitability.

### Outlook and risks
- Medium-term growth: expected to strengthen as oil production gradually returns to capacity and nonhydrocarbon economy remains robust; supported by Vision 2040 reforms and large-scale investment projects.
- External and fiscal positions:
  - Current account: estimated deficit of 1.1 percent of GDP in 2025.
  - Government debt: 36.1 percent of GDP by September 2025.
- Risks (skewed to the downside):
  - Escalation of trade tensions and geoeconomic fragmentation → weaker global demand and lower oil prices.
  - Renewed regional geopolitical tensions → potential trade disruptions and weaker tourism and investment.
- Upside scenarios:
  - Higher oil prices from global growth upturn or intensified geopolitical tensions.
  - Accelerated structural reforms bolstering confidence and diversification.

### Fiscal policy and public finances
- 2024 overall fiscal balance: 3.3 percent of GDP (6.8 percent in 2023).
- Overall balance estimated at 0.7 percent of GDP in 2025.
- Nonhydrocarbon primary balance: estimated to have narrowed by 2 percent of nonhydrocarbon GDP in 2025.
- Selected fiscal indicators (percent of GDP):
  - Revenue and grants: 31.9 in 2024; 29.5 in 2025.
    - Hydrocarbon revenue: 23.4 in 2024; 20.4 in 2025.
    - Nonhydrocarbon and grants: 8.5 in 2024; 9.1 in 2025.
  - Expenditure: 28.6 in 2024; 28.8 in 2025.
  - Overall balance (Net lending/borrowing): 3.3 in 2024; 0.7 in 2025.
  - Central government debt: 35.4 in 2024; 35.8 in 2025.
- Fiscal actions and recommendations:
  - Accelerate tax administration reforms and optimize tax policy.
  - Rationalize spending; phase out untargeted subsidies while protecting the most vulnerable.
  - Roll out a comprehensive medium-term fiscal framework; adopt a credible fiscal rule after prerequisites met.
  - Consolidate stabilization funds; strengthen debt management; develop sovereign asset–liability management (SALM).

### Public sector deleveraging and government finances
- Government repaid $1.5 billion in debt.
- Debt-to-GDP ratio: declined from 37.5 percent at end-2023 to 36.1 percent by end-September 2025.
- Government net financial asset position: improved from –7.4 percent of GDP in 2023 to –1.9 percent in 2024.
- SOEs’ debt: 30.8 percent of GDP at end-2024 (32 percent at end-2023), rising to 32 percent by end-September 2025.
- Sovereign spreads: average 129 basis points during January–October 2025 (down from 310 basis points in 2022).
- Oman’s investment grade status affirmed.

### Monetary and financial sector policies
- Exchange rate regime: peg to the US dollar remains appropriate and credible anchor.
  - Exchange rate: Omani rial pegged to the U.S. dollar at RO 1 = $2.6008; central bank fixed buying/selling rates RO 1 = $2.5974/2.6042.
- Monetary policy and institutions:
  - Need to reaffirm primacy of price and financial stability given CBO’s expanded mandate.
  - Implement Monetary Policy Enhancement Project (MPEP) and full-fledged Treasury Single Account (TSA).
  - Transition to active liquidity management; introduce OMR standing deposit facility; set target policy rate within corridor; move to cash-only reserve requirements.
- Financial sector resilience and reforms:
  - 2025 FSAP: sector resilient to severe shocks; banks well capitalized and liquid; provisioning covering 121.9 percent of NPLs as of September 2025.
  - Recommendations: operationalize macroprudential strategy; enhance supervision and regulation; improve AML/CFT frameworks; strengthen safety net and crisis management; deepen capital markets; address SME financing impediments.

### Structural reform priorities and the 11th Five-Year Development Plan (2026–2030)
- Plan overview:
  - 11th Five-Year Development Plan in final review and to be issued in January 2026; anchored in Vision 2040 to accelerate diversification and social development.
  - Mobilization of additional capital spending: OIA-affiliated SOEs planning investments around OMR 12 billion; budgetary government increasing capital expenditure by about OMR 1 billion.
- Labor market and human capital:
  - Expand vocational and training programs; permit temporary sectoral mobility for expatriates; regulate part-time and remote work.
  - National Employment Program for on-the-job training and reskilling.
  - Policy priorities: narrow public–private wage gap; improve educational outcomes; expand early childhood education; increase female labor force participation.
- Regulatory and business environment:
  - Establish court to settle business disputes; strengthen product market competition; streamline administrative procedures and trade facilitation; foster R&D and SME financing.
- SOEs and state role:
  - FSAP highlights resilience of public enterprises; planned SOE expansions should crowd in private investment; publish SOEs' financial statements regularly.
- Trade integration and SEZs:
  - Limited GVC backward linkages; policy levers: open trade and investment regimes; leverage SEZs; strengthen linkages between SEZs and domestic economy.
- Digitalization and AI readiness:
  - National Program for AI and Advanced Digital Technologies (2024–2026).
  - Staff estimates: AI could boost labor productivity by up to 1 percentage point over the medium term.
- Renewable energy and subsidy reform:
  - Proposed allocation of subsidy savings: 25 percent to targeted household transfers; 75 percent to scale up capital spending.
  - Oman’s NDC: target 7 percent reduction in greenhouse gas and increase renewables share to 40 percent by 2040.

### Key macroeconomic statistics and projections (selected, exact figures)
- Average crude oil export price (US$/barrel): 81.2 in 2024; 70.6 in 2025; projected 62.1 in 2026.
- Crude and condensates oil production (millions of barrels/day): 0.995 in 2024; 1.005 in 2025; projected 1.048 in 2026.
- Natural gas production (millions of cubic meters per day): 149.2 in 2024; 152.3 in 2025; projected 155.5 in 2026.
- Nominal GDP (US$ billions): 107.1 in 2024; 106.5 in 2025; projected 107.5 in 2026.
- Real GDP growth (percent): 1.6 in 2024; 2.8 projected for 2025 (Table 1); series by year: 8.0 (2022), 1.4 (2023), 1.6 (2024), 2.8 (2025), 3.8 (2026).
- Consumer prices (average): 0.6 in 2024; 1.0 projected for 2025 in Table 1.
- Gross capital formation (% of GDP): 26.0 in 2024; 26.5 in 2025.
- Gross national savings (% of GDP): 29.2 in 2024; 25.4 in 2025.
- Current account balance (US$ billions): 3.5 in 2024; -1.2 in 2025.
  - Current account balance (% of GDP): 3.2 in 2024; -1.1 in 2025.
- Central Bank gross reserves: 18.4 (2024); 19.3 (2025).
- Total external debt (% of GDP): 58.0 in 2024; 58.2 in 2025.

### Fiscal position, debt dynamics, and medium-term projections (selected series)
- Central government debt (% of GDP): 35.4 (2024); 35.8 (2025); 35.9 (2026); 34.7 (2027); 33.3 (2028); 32.0 (2029); 29.8 (2030).
- Central government net financial assets (% of GDP): –1.9 (2024); –1.4 (2025); –1.9 (2026); –1.9 (2027); 0.1 (2028); 2.5 (2029); 5.2 (2030).
- Fiscal balance (% of GDP): 3.3 (2024); 0.7 (2025); 0.1 (2026); 0.6 (2027); 1.7 (2028); 2.1 (2029); 2.7 (2030).
- Nonhydrocarbon primary balance (% of nonhydrocarbon GDP): –30.9 (2024); –28.9 (2025); –26.9 (2026); –25.5 (2027); –23.8 (2028); –22.7 (2029); –21.5 (2030).
- Current account balance (% of GDP): 3.2 (2024); –1.1 (2025); –3.1 (2026); –1.5 (2027); 0.2 (2028); 0.7 (2029); 1.2 (2030).
- CBO reserves (US$ billion): 18.4 (2024); 19.3 (2025); 17.8 (2026); 17.4 (2027); 18.4 (2028); 19.4 (2029); 20.9 (2030).
- In months of next year’s imports of goods and services: 4.2 (2024); 4.4 (2025); 4.0 (2026); 3.8 (2027); 3.9 (2028); 4.0 (2029); 4.1 (2030).

### Downside oil price scenario (Annex V) — explicit outcomes
- Shock assumption: oil prices fall to $40 per barrel in 2026 (about 36 percent decline vs baseline).
- Non-hydrocarbon GDP growth: 2.6 percent in 2026; 3.5 percent in 2027 (reductions of 1.1 and 0.3 percentage points vs baseline).
- Fiscal balance: -7.3 percent of GDP in 2026 (scenario) vs +0.1 percent of GDP under baseline; -1.6 percent of GDP in 2027; surplus from 2028 onward.
- Government net financial assets: drawn down to about -12.0 percent of GDP in 2026 (scenario) vs -1.9 percent under baseline; improve to 4.6 percent of GDP in 2027.
- Current account balance: -14.5 percent of GDP in 2026 (scenario), worsened by 11.4 percentage points relative to baseline; near balance in 2028; surplus from 2029 onward.

### Policy recommendations and priorities (selected)
- Fiscal:
  - Mobilize nonhydrocarbon revenues; narrow the tax gap (estimated tax gap 14 percent of nonhydrocarbon GDP).
  - Implement PIT (effective 2028) and Pillar Two measures; strengthen OTA and accelerate Tax Administration Modernization Program.
  - Phase out untargeted energy subsidies (energy subsidies about 2 percent of GDP in 2024–2025); phase out untargeted electricity subsidies by 2030.
  - Strengthen fiscal frameworks: publish MTFP 2026–2030; adopt fiscal rule based on PIH prerequisites; develop SALM and publish MTDS.
- Monetary and financial:
  - Keep exchange rate peg; transition to active liquidity management; implement TSA; operationalize MPEP; enhance macroprudential strategy; implement 2025 Banking Law; strengthen AML/CFT.
- Structural:
  - Accelerate Vision 2040 reforms to boost diversification, narrow public–private wage gap, increase female labor participation, improve education and vocational training, deepen trade integration, and advance digitalization and AI readiness.
- Financial sector:
  - Deepen capital markets; address SME financing constraints; enhance supervision and crisis management; strengthen the financial safety net.

### Executive Board assessment and implementation
- Executive Directors commended Oman’s resilience and steady reform implementation under Vision 2040.
- Emphases: sustain prudent policies; advance tax policy and administration reforms; phase out untargeted subsidies while protecting the vulnerable; rationalize non-essential spending; reinforce fiscal frameworks and transparency; consolidate stabilization funds; strengthen debt management and SALM; ensure CBO’s expanded mandate remains anchored in price and financial stability; continue FSAP-aligned reforms.

*Compiled from the IMF staff report text for the 2025 Article IV Consultation as presented in the provided PDF content.*

### 2.3 percent (year on year) in the first half of 2025, supported by expansions in the

### OMAN: STAFF REPORT FOR THE 2025 ARTICLE IV CONSULTATION

### Recent developments
- Real GDP growth: 1.6 percent in 2024; 2.3 percent (year on year) in 2025H1.
- Real nonhydrocarbon GDP: 3.3 percent in 2024; 3.5 percent (year on year) in 2025H1.
  - Nonhydrocarbon expansion driven by manufacturing, wholesale and retail, logistics, construction, agriculture and fishing, tourism, and logistics.
- Real hydrocarbon GDP contracted in 2024 due to OPEC+ oil production curbs; hydrocarbon output weighed on overall growth.
- Inflation (headline):
  - 0.6 percent in 2024.
  - 0.9 percent during January–October 2025 (edging up from 0.6 percent in 2024).
- Labor market:
  - Employment: +6.7 percent in 2023; -0.5 percent in 2024; +1.1 percent at end-2025Q3.
  - Unemployment rate: 3.3 percent in 2024 (3.2 percent in 2023).
  - Youth unemployment (ages 15–24): 12.5 percent.
- Financial Sector Assessment Program (FSAP) 2025: banking system found resilient with ample capital and liquidity buffers and robust profitability.

### Outlook and risks
- Medium-term growth:
  - Expected to strengthen as oil production gradually returns to capacity and nonhydrocarbon economy remains robust.
  - Supported by ongoing reforms under Vision 2040 and rollout of large-scale investment projects.
- External and fiscal positions:
  - Current account: estimated deficit of 1.1 percent of GDP in 2025, weighed down by softer oil prices.
  - Government debt: 36.1 percent of GDP by September 2025.
- Risks skewed to the downside:
  - Escalation of trade tensions and geoeconomic fragmentation → weaker global demand and lower oil prices → negative effects on growth, fiscal, and external positions.
  - Renewed regional geopolitical tensions → potential trade disruptions and weaker tourism and investment.
- Upside scenarios:
  - Higher oil prices from global growth upturn or intensified geopolitical tensions affecting supply.
  - Accelerated structural reforms bolstering confidence and enhancing diversification.

### Fiscal policy and public finances
- Fiscal stance:
  - Prudent fiscal management maintained overall balance in surplus despite declining oil prices.
  - Overall balance estimated at 0.7 percent of GDP in 2025.
- Nonhydrocarbon primary balance:
  - Estimated to have narrowed by 2 percent of nonhydrocarbon GDP in 2025, reflecting expenditure restraint and improved nonhydrocarbon revenue collection.
- Key indicators from Table 1 (selected):
  - Revenue and grants (percent of GDP): 31.9 in 2024; 29.5 in 2025.
    - Hydrocarbon revenue (percent of GDP): 23.4 in 2024; 20.4 in 2025.
    - Nonhydrocarbon and grants (percent of GDP): 8.5 in 2024; 9.1 in 2025.
  - Expenditure (percent of GDP): 28.6 in 2024; 28.8 in 2025.
  - Overall balance (Net lending/borrowing, percent of GDP): 3.3 in 2024; 0.7 in 2025.
  - Central government debt (percent of GDP): 35.4 in 2024; 35.8 in 2025.
- Policy recommendations highlighted:
  - Accelerate tax administration reforms and optimize tax policy.
  - Rationalize spending, phase out untargeted subsidies while protecting the most vulnerable.
  - Strengthen fiscal frameworks: roll out a comprehensive medium-term fiscal framework; adopt a credible fiscal rule after satisfying prerequisites; develop sovereign asset-liability management.
  - Consolidate stabilization funds, strengthen debt management, and develop sovereign asset-liability management.

### Monetary and financial sector policies
- Exchange rate regime:
  - The peg to the US dollar remains appropriate and a credible policy anchor for Oman.
- Monetary policy and institutions:
  - Need to reaffirm primacy of price and financial stability given Central Bank of Oman’s expanded mandate.
  - Implement Monetary Policy Enhancement Project and a full-fledged Treasury Single Account system to strengthen monetary policy transmission.
  - Transition to an active liquidity management framework to improve transmission.
- Financial sector resilience and reforms:
  - 2025 FSAP finds the financial sector resilient to severe shocks; banks well capitalized with ample liquidity and robust profitability.
  - Recommendations:
    - Operationalize a macroprudential strategy.
    - Continue to enhance supervision and regulation.
    - Improve AML/CFT frameworks.
    - Strengthen financial safety net and crisis management frameworks.
    - Deepen capital markets and address structural impediments to SME financing.

### Structural reform priorities
- Reform momentum under Vision 2040 is central to longer-term resilience and diversification.
- Key structural policy priorities:
  - Narrow public–private wage gap.
  - Increase female labor force participation.
  - Boost educational and vocational training outcomes.
  - Improve business environment and SOE transparency.
  - Improve data provision.
  - Deepen trade integration and advance digitalization and AI readiness.
  - Continue renewable energy initiatives.
- Rationale: strengthen productivity and competitiveness, foster private sector development, and support transition toward a more sustainable and diversified economy.

### Executive Board assessment and recommendations
- Executive Directors agreed with staff appraisal and commended Oman’s economic resilience and steady reform implementation under Vision 2040.
- Emphases and recommendations from Directors:
  - Sustain prudent policies and reform momentum to diversify the economy and enhance potential growth.
  - Further advance tax policy and administration reforms.
  - Phase out untargeted subsidies while protecting the most vulnerable.
  - Rationalize non-essential spending.
  - Reinforce fiscal frameworks, governance, and transparency; develop a fiscal rule; strengthen public investment management, and budget preparation and execution.
  - Consolidate stabilization funds, strengthen debt management, and develop sovereign asset-liability management.
  - Ensure Central Bank of Oman’s expanded development mandate remains anchored in price and financial stability.
  - Continue FSAP-aligned reforms: macroprudential strategy, supervision, AML/CFT, financial safety net, crisis management, deepening capital markets, and SME financing.

### Key statistics (selected from Table 1)
- Average crude oil export price (US$/barrel): 81.2 in 2024; 70.6 in 2025; projected 62.1 in 2026.
- Crude and condensates oil production (millions of barrels/day): 0.995 in 2024; 1.005 in 2025; projected 1.048 in 2026.
- Natural gas production (millions of cubic meters per day): 149.2 in 2024; 152.3 in 2025; projected 155.5 in 2026.
- Nominal GDP (US$ billions): 107.1 in 2024; 106.5 in 2025; projected 107.5 in 2026.
- Real GDP growth (percent): 1.6 in 2024; 2.8 projected for 2025 in Table 1; Real GDP series by year: 8.0 (2022), 1.4 (2023), 1.6 (2024), 2.8 (2025), 3.8 (2026).
- Consumer prices (average): 0.6 in 2024; 1.0 projected for 2025 in Table 1.
- Gross capital formation (percent of GDP): 26.0 in 2024; 26.5 in 2025.
- Gross national savings (percent of GDP): 29.2 in 2024; 25.4 in 2025.
- Current account balance (US$ billions): 3.5 in 2024; -1.2 in 2025.
  - Current account balance (percent of GDP): 3.2 in 2024; -1.1 in 2025.
- Central Bank gross reserves: 18.4 (2024); 19.3 (2025).
- Total external debt (percent of GDP): 58.0 in 2024; 58.2 in 2025.

_Compiled from the IMF staff report text for the 2025 Article IV Consultation as presented in the provided PDF content._

### 6.       The fiscal position moderated but remained resilient. Despite lower hydrocarbon

### 6.       The fiscal position moderated but remained resilient. Despite lower hydrocarbon revenues, the overall fiscal balance stood at 3.3 percent of GDP in 2024 (6.8 percent in 2023).

### Fiscal position and recent developments
- Overall fiscal balance: 3.3 percent of GDP in 2024 (6.8 percent in 2023).
- Nonhydrocarbon primary deficit widened by 1.9 percentage points of nonhydrocarbon GDP in 2024, largely reflecting:
  - higher social transfers under the new social protection law implemented in 2024;
  - additional capital spending for critical infrastructure and public service projects.
- Overall fiscal balance in January–September 2025: 4.5 percent of GDP, helped by expenditure restraint.
- Source: Country authorities and IMF staff calculations.

### Public sector deleveraging and government finances
- Government repaid $1.5 billion in debt.
- Debt-to-GDP ratio: declined from 37.5 percent at end-2023 to 36.1 percent by end-September 2025.
- Government net financial asset position: improved from –7.4 percent of GDP in 2023 to –1.9 percent in 2024.
- SOEs’ debt: 30.8 percent of GDP at end-2024 (32 percent at end-2023), before edging up to 32 percent by end-September 2025 — driven by expansion-related borrowings primarily to finance developmental projects in the utilities and logistics sectors.
- Sources: Country authorities, Haver Analytics, NCSI, and IMF staff calculations.

### Sovereign spreads and credit assessment
- Sovereign spreads: average of 129 basis points during January–October 2025 — down from 310 basis points in 2022 — and now below the GCC average.
- Oman’s investment grade status has been affirmed.

### External position and reserves
- Current account surplus: 3.2 percent of GDP in 2024 (2.3 percent in 2023), supported by strong performance in refined oil and nonhydrocarbon exports.
- CBO international reserves: $18.4 billion by end-2024 (4.2 months of prospective imports and 68 percent of the ARA metric).
- Overall liquid external buffers including OIA liquid foreign assets: $28.4 billion (106 percent of the ARA metric).
- CBO reserves: $19.3 billion at end-September 2025.
- Staff assessment: Oman’s external position is in line with the level implied by fundamentals and desired policies (Annex II).
- Sources: Bloomberg and IMF staff calculations; Country authorities and IMF staff calculations.

### Banking sector soundness
- Capital and liquidity buffers: well above regulatory requirements.
- Profitability: banking system remains profitable, supported by healthy margins.
- Asset quality: issues persist in some sectors (significant share of restructured and Stage 2 loans), but NPLs remain contained.
- Provisioning: total provisioning covering 121.9 percent of NPLs as of September 2025.
- Banks’ net foreign asset position: remains positive but varies significantly across banks.
- Private sector credit growth: 5.7 percent (y-o-y) in September 2025, underpinned by a robust deposit base.
- Source: Central Bank of Oman (CBO).

### Outlook and projections (medium term)
- GDP growth (Real GDP growth, percent): 
  - 2024: 1.6
  - 2025: 2.8
  - 2026: 3.8
  - 2027: 3.8
  - 2028: 3.9
  - 2029: 3.6
  - 2030: 3.4
- Nonhydrocarbon GDP growth (percent): 3.3 (2024); 3.5 (2025); 3.7 (2026); 3.8 (2027); 3.8 (2028); 3.9 (2029); 4.0 (2030).
- Inflation (percent): 0.6 (2024); 1.0 (2025); 1.2 (2026); 1.5 (2027); 1.7 (2028); 1.8 (2029); 2.0 (2030).
- Fiscal balance (percent of GDP): 3.3 (2024); 0.7 (2025); 0.1 (2026); 0.6 (2027); 1.7 (2028); 2.1 (2029); 2.7 (2030).
- Nonhydrocarbon primary balance (percent of nonhydrocarbon GDP): –30.9 (2024); –28.9 (2025); –26.9 (2026); –25.5 (2027); –23.8 (2028); –22.7 (2029); –21.5 (2030).
- Central government debt (percent of GDP): 35.4 (2024); 35.8 (2025); 35.9 (2026); 34.7 (2027); 33.3 (2028); 32.0 (2029); 29.8 (2030).
- Central government net financial assets (percent of GDP): –1.9 (2024); –1.4 (2025); –1.9 (2026); –1.9 (2027); 0.1 (2028); 2.5 (2029); 5.2 (2030).
- Current account balance (percent of GDP): 3.2 (2024); –1.1 (2025); –3.1 (2026); –1.5 (2027); 0.2 (2028); 0.7 (2029); 1.2 (2030).
- CBO reserves (US$ billion): 18.4 (2024); 19.3 (2025); 17.8 (2026); 17.4 (2027); 18.4 (2028); 19.4 (2029); 20.9 (2030).
- In months of next year’s imports of goods and services: 4.2 (2024); 4.4 (2025); 4.0 (2026); 3.8 (2027); 3.9 (2028); 4.0 (2029); 4.1 (2030).
- Memorandum items:
  - Average crude oil export price (US$/barrel): 81.2 (2024); 70.6 (2025); 62.1 (2026); 62.2 (2027); 63.2 (2028); 64.4 (2029); 65.3 (2030).
  - Crude and condensates oil production (millions of barrels/day): 1.00 (2024); 1.00 (2025); 1.05 (2026); 1.09 (2027); 1.14 (2028); 1.18 (2029); 1.20 (2030).
  - Natural gas production (millions of cubic meters per day): 149.2 (2024); 152.3 (2025); 155.5 (2026); 159.3 (2027); 163.1 (2028); 167.0 (2029); 171.0 (2030).

### Risks and scenarios
- Downside risks: escalation of trade tensions, geoeconomic fragmentation, weaker global demand, lower oil prices, regional geopolitical tensions disrupting trade, tourism, and investment.
- Upside risks: higher oil prices from a global growth upturn or intensified geopolitical tensions affecting oil supply; accelerated structural reforms bolstering confidence and diversification.
- Downside scenario example:
  - A temporary shock to oil prices falling to $40 per barrel in 2026 would:
    - lower nonhydrocarbon GDP growth by 1.1 percentage points;
    - drive the fiscal and external balances into deficits of 7.3 and 14.5 percent of GDP, respectively (Annex V).
  - Fiscal space and financial buffers could be deployed to support the economy.
- Impact of tariffs:
  - U.S. 10 percent tariff on non-energy imports and increases to tariffs on steel and aluminum to 50 percent in June 2025 increased the effective tariff rate on US imports from Oman to about 20 percent (up from virtually zero until early-March, owing to the U.S.-Oman Free Trade Agreement).
  - Merchandise exports to the U.S.: around 2.3 percent of total merchandise exports to the world and 1.3 percent of GDP in 2023 — direct impact of these tariffs expected to be minimal.
  - Higher global tariffs could indirectly affect Oman given reliance on hydrocarbon exports; China is the largest importer of Omani oil, accounting for about 95 percent.
- Global financial uncertainty:
  - Empirical estimates suggest increases in financial uncertainty (proxied by shocks to the VIX) have only a moderate impact on Oman’s sovereign yield spreads, CDS, and equity flows.

### Authorities’ views
- Authorities agreed with staff’s assessment of the economic outlook, risks, and tariff impacts.
- Emphasized that prudent policies and progress on structural reforms have supported rebuilding of policy buffers, strengthening economic resilience, and fostering inclusive growth.
- Highlighted upside risks from the upcoming 11th Five-Year Development Plan expected to foster economic diversification, create more jobs for Omanis, and further enhance resilience.

### Policy discussions and recommendations
- Focus areas: (i) pursuing fiscal reforms while remaining agile to recalibrate fiscal policy if oil prices remain lower; (ii) enhancing monetary policy frameworks; (iii) safeguarding financial stability and advancing financial sector development; (iv) sustaining reforms to accelerate economic transformation.

A. Fiscal policy
- 2025 fiscal stance: continued commitment to fiscal discipline.
  - Nonhydrocarbon primary deficit estimated to have narrowed by 2 percent of nonhydrocarbon GDP in 2025.
  - Improvement drivers: reductions in fuel subsidies (oil prices remaining below the $75 cap), restraint in non-wage expenditures, and higher nonhydrocarbon revenues.
- 2026 budget expectations:
  - Nonhydrocarbon primary deficit expected to shrink by 2 percentage points of nonhydrocarbon GDP, driven by compressed spending on wages, energy subsidies, and capital expenditures.
  - Overall fiscal surplus set to narrow to 0.1 percent of GDP.
  - Government debt anticipated to remain at around 36 percent of GDP.
  - Some fiscal space remains for temporary, targeted economic support if adverse shocks materialize.

- Intergenerational equity and Fiscal anchors:
  - Staff PIH-based estimate: nonhydrocarbon primary deficit consistent with intergenerational equity stands at around 10 percent of nonhydrocarbon GDP.
  - Under current policies, nonhydrocarbon primary deficit expected to shrink by around 15 percent of nonhydrocarbon GDP by 2035 — including a compression of roughly 7.4 percent during 2026–2030 driven by broad-based spending restraint.
  - Additional measures of around 3 percent of nonhydrocarbon GDP required over the medium term, primarily from:
    - reducing the tax gap;
    - rationalizing non-essential current spending;
    - phasing out untargeted energy subsidies while protecting the most vulnerable.
  - Achieving the PIH-based fiscal anchor over a 10-year horizon will ensure an orderly fiscal adjustment.

- Mobilizing nonhydrocarbon revenues:
  - Tax revenues increased by only 1.9 percent of nonhydrocarbon GDP between 2019 and 2024, leaving a large tax gap estimated at 14 percent of nonhydrocarbon GDP.
  - Need for a medium-term revenue strategy to narrow the tax gap.

  - Tax policy:
    - Recently enacted Personal Income Tax (PIT) law set for implementation in 2028.
    - Staff estimate PIT revenues at about 0.3 percent of nonhydrocarbon GDP in the early implementation years.
    - Introduction of the Qualified Domestic Minimum Top-up Tax and Income Inclusion Rule, aligned with Pillar Two rules starting from 2025.
    - Authorities agreed to transition gradually to a fully-fledged Tax Policy Unit within the MoF, continuing interim coordination with OTA.

  - Tax administration:
    - Four-year Tax Administration Modernization Program (third year) has restructured the Oman Tax Authority (OTA) and established a compliance risk management unit.
    - Staff recommendations: accelerate strengthening of OTA staffing, modernize IT systems, establish a comprehensive taxpayer registry, enhance performance monitoring, and implement risk-based compliance measures.
    - Implement VAT e-invoicing as scheduled in 2026 and expand digital tax stamp to strengthen compliance and boost tax collection.

- Rationalizing spending:
  - Energy subsidies: about 2 percent of GDP in 2024–2025.
  - Opportunity to lift fuel price cap while oil prices remain lower to reduce untargeted subsidies.
  - Staff recommended phasing out untargeted electricity subsidies by 2030, in line with authorities’ previous commitments, with clear communication to enhance predictability and credibility.
  - Further rationalization of non-essential current spending and strengthening the public investment management framework due to recent capital spending overruns.

### Policy priorities summary (selected)
- Monetary policy: advance reforms to improve monetary policy transmission; continue aligning policy rates with the Fed.
- Fiscal policy: sustain non-hydrocarbon revenue mobilization efforts; phase out untargeted subsidies; strengthen fiscal frameworks; accelerate public financial management reforms; develop a sovereign asset and liability management framework.
- Structural policies: accelerate economic transformation; tackle labor market bottlenecks; enhance the business environment; increase trade integration; advance digitalization and AI readiness.
- Financial sector policies: strengthen macroprudential framework; enhance banking regulation and supervision; improve framework for safety net and crisis management; enhance SMEs’ access to finance.

*Source: Country authorities and IMF staff calculations; IMF staff estimates and projections as presented in the chapter.*

### Box 1. Oman: Enhancing Progressivity through Personal Income Tax

### Box 1. Oman: Enhancing Progressivity through Personal Income Tax

### Personal Income Tax (PIT): Design and Coverage
- PIT applies a 5 percent rate on net annual income above OMR 42,000 (about USD 109,000), targeting roughly the top 1 percent of earners.
- Tax base covers income from employment, self-employment, investments, and capital gains (excluding the primary residence).
- Deductions incorporated for housing, education, healthcare, charitable contributions, and work-related expenses.
- Residents are taxed on global income; non-residents are taxed on Oman-sourced income.
- Effective in 2028, with a phased rollout supported by investments in digital tax administration.

### Equity, Fiscal Resilience, and Policy Rationale
- By focusing on high-income earners and aligning deductions with social priorities, the PIT enhances progressivity and reinforces confidence in the fairness of the tax system.
- PIT contributes to fiscal resilience by creating a more stable revenue base less vulnerable to oil price fluctuations.

### Implementation Foundations and Administrative Requirements
- Successful rollout requires strengthening tax administration capacity through:
  - staff training,
  - IT upgrades,
  - creation of a comprehensive taxpayer registry,
  - and a clear communication strategy to support compliance.
- Part of broader reforms and modernization efforts noted under fiscal and administrative measures through 2025.

### Contingency Planning for Oil Price Shocks (Paragraph 17)
- For a temporary oil price shock: drawing on fiscal buffers and external borrowing—while preserving investment-grade status—would be appropriate.
- Any drawdown of government deposits should be carefully calibrated to avoid financial stability risks.
- For a sustained decline in oil prices: stronger fiscal consolidation would be needed through:
  - revisiting the VAT rate,
  - phasing out untargeted energy subsidies while strengthening safety nets,
  - and reducing other non-priority spending.
- Staff commended the development of contingency planning frameworks within the OIA and Energy Development Oman (EDO).

### Strengthening Fiscal Frameworks and Governance (Paragraph 18)
- Updating and strengthening the Medium-Term Fiscal Plan (MTFP):
  - Timely preparation and publication of the MTFP for 2026-2030 is essential.
  - The updated MTFP should include clear fiscal objectives, multi-year rolling projections of realistic revenues and expenditures, and a comprehensive analysis of fiscal risks.
  - Endorsing the MTFP at the highest level (Council of Ministers) would enhance fiscal credibility.
  - Reinforcing the Macro-Fiscal Unit’s capacity is key to enhancing fiscal planning.
- Adopting a fiscal rule:
  - Staff recommended a rule targeting a sustainable nonhydrocarbon primary deficit based on the PIH, complemented by the current debt ceiling (60 percent of GDP).
  - Authorities agreed that prerequisites—credible MTFP, stronger public financial management institutions, sufficient fiscal buffers, and robust institutional capacity—are critical.
- Enhancing budget preparation and execution:
  - Integrate the MTFP into the budget preparation process.
  - Establish a formal supplementary budget system, particularly given recent capital expenditure overruns.
  - Planned roll out of the government financial system (Maliya) FY2026-2030 will improve fiscal management and reporting.
- Reinforcing transparency, cash management, and fiscal risk analysis:
  - Recent efforts include publishing more detailed budget documents, fiscal risks, and domestic annual borrowing plans.
  - Staff encouraged resuming publication of a pre-budget statement.
  - Accelerate rollout of the Treasury Single Account (TSA) and deepen fiscal risk analysis, considering oil prices’ increased volatility.
- Establishing a framework for stabilization and saving objectives:
  - Authorities have multiple funds and accounts for stabilization and saving for future generations.
  - Staff recommended consolidating the current pools of assets owned by the MoF into a dedicated stabilization fund, with clearly laid-out rules for deposit and withdrawal of resources to insulate the budget and economy from commodity price volatility and external shocks.

### Debt Strategy and Sovereign Asset–Liability Management (Paragraph 19)
- Publishing the debt strategy and developing a sovereign asset–liability management (SALM) framework is increasingly important amid oil price volatility and global uncertainty.
- Staff commended notable success of the debt management strategy, leading to a sharp decline in the debt-to-GDP ratio, and welcomed ongoing work on establishing a National Assets Registry.
- Important actions going forward:
  - Ensure the Medium-Term Debt Management Strategy is regularly updated and published.
  - Make steady progress in developing a comprehensive SALM framework—leveraging IMF technical assistance—and promote an integrated view of the public sector balance sheet.

### Authorities’ Views (Paragraphs 20 and related)
- Authorities reaffirmed commitment to fiscal prudence and growth-friendly consolidation, emphasizing a gradual approach to fiscal adjustment to:
  - enhance resilience to oil price fluctuations,
  - safeguard social spending and priority investments,
  - and continue building buffers.
- Following substantial debt reduction under the preceding plan, the MTFP (2026-2030) shifts emphasis toward:
  - fostering growth,
  - improving spending efficiency,
  - reducing the tax gap,
  - and strengthening public financial management (PFM).
- Authorities clarified ongoing measures aim to:
  - lower the cost of electricity generation, transmission, and supply,
  - increase the share of renewables in the energy mix to contain subsidy levels despite rising demand,
  - and phase out untargeted subsidies by 2030.

*Source: IMF staff*

### 33.      The 11

### The 11th Five-Year Development Plan (2026-2030) and structural reform agenda

### Plan overview and financing
- The 11th Five-Year Development Plan (2026-2030) is in its final review stage and will be issued in January 2026.
- Anchored in Vision 2040, the Plan aims to accelerate economic diversification through targeted investment in priority sectors and reinforce social development via education, healthcare, and infrastructure upgrading.
- Mobilization of additional capital spending:
  - OIA-affiliated SOEs planning investments of around OMR 12 billion.
  - The budgetary government increasing capital expenditure by about OMR 1 billion.
- Policy emphasis: ensure expansion crowds in private sector investment and is complemented by structural reforms to maximize economic and social returns.

### Labor market reforms and human capital
- Ongoing reforms:
  - Expanding vocational and training programs.
  - Permitting temporary sectoral mobility for expatriates to meet seasonal demand.
  - Regulating part-time and remote work to encourage participation by women, students, and retirees.
  - Establishing sectoral committees (government, private sector, labor unions) to align workforce needs.
- National Employment Program initiatives provide on-the-job training and reskilling to support absorption of Omanis, particularly youth and female, into the private sector.
- Policy priorities:
  - Continue narrowing the public–private wage gap.
  - Improve educational outcomes and strengthen the pipeline of STEM and vocational graduates.
  - Expand nationwide access to early childhood education to boost learning outcomes and female participation, which remains low relative to regional peers.

### Regulatory and business environment
- Reforms initiated to create a business-enabling environment, including establishing a court to settle business-related disputes.
- Further actions warranted:
  - Strengthen product market competition.
  - Streamline administrative and regulatory procedures, including trade facilitation.
  - Foster investment in research and development to enhance competitiveness and productivity of the nonhydrocarbon tradable sector.
- Progress noted: National Intellectual Property (IP) framework, Oman Digital Triangle initiative, and expanded SME financing.
- Recommendation: deepen collaboration between research institutions and the private sector to accelerate innovation and enable Omani firms to move up the value chain.

### Role of the state and SOEs
- FSAP analysis highlights the resilience of public enterprises with limited vulnerabilities, supported by recent OIA reforms.
- Caution: planned SOE expansions by OIA under the 11th Development Plan should be carefully assessed and calibrated to crowd in private investment rather than displace it.
- Transparency recommendation: regularly publish SOEs' financial statements to strengthen accountability and investor confidence.

### Trade integration and Special Economic Zones (SEZs)
- Oman’s integration into global value chains (GVCs) remains limited, particularly in backward linkages, reflecting a narrow export base concentrated in hydrocarbons.
- Policy levers to support export diversification and deeper GVC integration:
  - Further open trade and investment regimes.
  - Leverage strategic location and well-established SEZs.
  - Strengthen economic and trade ties with countries in Asia and East Africa.
  - Strengthen linkages between SEZs and the domestic economy through industrial clustering, enhanced support for local suppliers, and targeted human capital development.

### Digitalization and AI readiness
- On the IMF’s AI Preparedness Index, Oman ranks broadly in line with other GCC economies and performs above emerging economies average in the human capital and labor market policies dimension.
- Oman launched the National Program for AI and Advanced Digital Technologies (2024-2026).
- Staff empirical estimates: AI could boost Oman’s labor productivity by up to 1 percentage point over the medium term (Annex VII).
- Policy implications: accelerate digitalization and AI efforts while implementing education, training, and social protection policies to manage labor market adjustment.

### Renewable energy, subsidy reform, and macroeconomic effects
- Strategy: scale up renewable energy production and phase out energy subsidies.
- Proposed fiscal allocation of subsidy savings:
  - Direct 25 percent of the savings as transfers to targeted households.
  - Direct 75 percent to scale up capital spending, including adaptation to extreme weather events.
- Model-based simulation findings:
  - GDP effects are positive under reform scenarios.
  - Strongest impact under scenario s1 (only subsidy reforms and public investment).
  - Combined scenario s3 (subsidy reforms, public investment, and fulfilment of NDC commitments by Oman and other countries) shows a smaller but still positive effect as global oil and gas demand declines.
- Oman’s NDC: target of a 7 percent reduction in greenhouse gas and increase share of renewables in the energy mix to 40 percent by 2040.

### Data provision for surveillance
- Data provision remains broadly adequate for surveillance (Annex VIII).
- Authorities’ initiatives under the National Statistics and Information Strategy (2025-2030) include:
  - Compile quarterly balance of payments data.
  - Produce quarterly GDP by expenditure.
  - Align fiscal data compilation and reporting with GFSM 2014.
  - Publish financial soundness indicators.
- Staff recommendation: take additional measures to improve timeliness, frequency, comprehensiveness, and dissemination of national accounts, external, and fiscal data; IMF stands ready to provide capacity development.

### Authorities’ views
- Authorities reiterated commitment to structural reforms to advance economic transformation and foster vibrant nonhydrocarbon, export-driven sectors that create jobs for Omanis.
- Noted SME bottlenecks: access to finance, labor skill mismatches, and competition from larger foreign players; recommended targeted government support for SMEs.

### Staff appraisal — macroeconomic outlook and risks
- Reform progress enhances resilience and supports a favorable outlook:
  - Nonhydrocarbon growth expected to strengthen in the medium term driven by investment implementation and reforms under Oman Vision 2040.
  - Fiscal balance set to remain in surplus, supported by higher oil production and fiscal reforms.
  - Current account projected to shift into deficit in the near term on softer oil prices, before turning to surplus as nonhydrocarbon exports expand.
- Risks to the near-term outlook are tilted to the downside.

### Staff appraisal — fiscal, monetary, and financial policy recommendations
- Fiscal policy and governance:
  - Narrowing the nonhydrocarbon primary deficit in 2025-2026 is driven by lower fuel subsidies, spending restraint, and stronger nonhydrocarbon revenues.
  - Medium-term priorities: mobilize nonhydrocarbon revenues, phase out untargeted energy subsidies while protecting the most vulnerable, rationalize non-essential spending, advance tax policy and administration reforms, improve public investment management, and clearly communicate subsidy reform plans.
  - Publish the 2026-2030 MTFP with realistic multi-year projections and comprehensive fiscal risk analysis.
  - Progress on a fiscal rule, strengthen budget preparation and execution, roll out government financial management system, broader public sector reporting, TSA implementation, consolidate stabilization funds under a rule-based framework, strengthen debt management, and develop sovereign asset-liability management.
- Monetary policy framework:
  - The exchange rate peg remains an appropriate and credible policy anchor.
  - Transition to an active liquidity management framework, including:
    - Introduce an OMR standing deposit facility.
    - Set a target policy rate within the interest rate corridor.
    - Move to cash-only reserve requirements.
    - Roll out a full-fledged TSA in coordination with the MoF and the banking sector to enhance monetary policy transmission.
- Financial sector resilience:
  - Banking fundamentals remain solid; stress tests indicate the system can generally withstand severe shocks though few banks would fall under capital hurdle rates.
  - Liquidity buffers adequate; funding concentrations—particularly to the public sector—warrant close monitoring.
  - Priorities: operationalize a comprehensive macroprudential strategy, introduce a positive neutral CCyB, recalibrate borrower-based measures, review FX NOP limits, and implement the 2025 Banking Law to advance risk-based supervision.
  - Ensure CBO’s expanded development mandate remains anchored in price and financial stability.
  - Strengthen the financial safety net, deepen capital markets, and address structural impediments to SME financing to mobilize private capital.

### Long-term priorities for prosperity
- Key priorities to entrench long-term prosperity:
  - Narrow the public–private sector wage gap.
  - Boost educational and vocational training outcomes.
  - Increase female labor force participation.
  - Improve the business environment and publish SOEs’ financial statements regularly.
  - Build a competitive nonhydrocarbon tradable sector via trade integration, deeper SEZ–domestic linkages, scaling up R&D spending, and advancing digitalization and AI readiness.
  - Continue improving data timeliness, frequency, and comprehensiveness.

*Source: IMF staff chapter on Oman (excerpts).*

### 44.      Staff proposes that the next Article IV consultation with Oman follow the standard 12-

### Staff proposes that the next Article IV consultation with Oman follow the standard 12-month cycle.

### Recent Economic Developments
- Overall growth accelerated in 2024 despite contraction in the hydrocarbon sector, supported by robust nonhydrocarbon activities.
- Real GDP growth contributions (2017–2024): notable positive contribution from Nonhydrocarbon and negative/volatile contribution from Hydrocarbon (chart summary).
- Real nonhydrocarbon GDP (annual percentage change): shown relative to GCC and EMs 1/ (chart).
- Contribution to CPI inflation (2017–2024) by category: Transport, Food, Housing, water, electricity, gas and other fuels, Others; total contribution remained limited.
- CPI Inflation (annual percentage change) for Oman, GCC, EMs (2017–2024) remained subdued.
- Current account balance remained in comfortable surplus in 2024; crude oil export price movements shown (USD per barrel, RHS).
- Monthly nominal and real effective exchange rates (Index, 2010 = 100) show recent depreciation, primarily driven by a depreciating US dollar.
- Note: 1/ For EMs, total GDP. Sources: Country authorities and IMF staff calculations.

### Fiscal Sector Developments
- Total revenues moderated in 2024, weighed down by hydrocarbon receipts; expenditures picked up slightly, leading to a relatively lower overall fiscal surplus and higher nonhydrocarbon primary deficit.
- Central government net financial assets improved further in 2024 concurrent with a further decline in government debt.
- Central government deposits definition: central government deposits at depository corporations and Oman Investment Authority’s liquid assets less government debt (1/).
- Trends (charts): Revenues by Hydrocarbon and Nonhydrocarbon (Percent of GDP); Expenditures (Current and Capital, Percent of GDP); Overall Fiscal Balance (Percent of GDP); Nonhydrocarbon Fiscal Balance (Percent of Nonhydrocarbon GDP); Central Government Net Financial Assets (Percent of GDP); Government Debt (Percent of GDP).

### Monetary and Financial Developments
- Policy rates broadly followed the U.S. Federal Funds Rate; Oman overnight interbank rate and Repo rate tracked Fed movements (Interest Rates chart, percent).
- Banks’ reserves continued declining, reflecting expanding investment opportunities; average monthly interbank amounts rose.
- Public sector deposits at commercial banks remain significant; commercial bank deposit composition (Private sector, Government, Public enterprises, Non-residents) shown for 2017–2025 (percent of total deposits; note data for 2025 as of September).
- Credit to the private sector continued to grow, albeit at a slower pace relative to other GCC and EMs; Credit to the private sector (annual percentage change) series: 4.2, 4.7, 5.9, 6.1, 5.7, 5.9, 5.9, 6.1, 6.1 (Table 3 memorandum).
- Contribution to total credit growth by sector (Transport and Communication, Construction, Services, Personal Loans, Other) indicated (Q4 year-on-year).
- Stock market index in 2024 remained broadly at its 2023 level (Oman MSM 30 Index vs MSCI EM; data for 2025 as of mid-November).

### External Sector Developments
- Current account balance remained in surplus in 2024, helping accumulate foreign assets and reduce foreign liabilities, further improving Oman’s net international investment position.
- Nonhydrocarbon exports resumed growth in 2024 while imports grew faster than in 2023.
- Hydrocarbon exports increased in 2024, primarily driven by a rise in refined oil exports; hydrocarbon exports (US$ billion) series shown for 2017–2024.
- External breakeven oil price remained broadly in line with the WEO oil price (External breakeven and WEO oil price, $US per barrel).
- Note: coverage of non-hydrocarbon trade data expanded in 2020 to include free-trade zones; data from 2020 onward not comparable to prior years.

### Banking Sector Soundness
- Financial soundness indicators (2018–Sep-2025) highlight:
  - BIS Capital Ratio: 17.9 (2018), 18.5 (2019), 18.8 (2020), 19.4 (2021), 19.7 (2022), 18.9 (2023), 18.2 (2024), 18.0 (Sep-2025).
  - Core Capital Ratio: 16.6 (2018) to 17.5 (Sep-2025).
  - NPLs: 2.7 (2018), 3.5 (2019), 4.2 (2020), 4.2 (2021), 4.4 (2022), 4.5 (2023), 4.5 (2024), 4.5 (Sep-2025).
  - Net NPLs: 1.0 (2018) to 1.4 (Sep-2025).
  - Restructured/rescheduled loans to total loans rose to 12.1 (2022) and declined to 10.1 (Sep-2025).
  - Provisions to NPLs: 118.1 (2018) to 121.9 (Sep-2025).
  - Return on Assets: 1.6 (2018) to 1.5 (Sep-2025); Return on Equity: 10.6 (2018) to 10.1 (Sep-2025).
  - Liquidity ratios: Net Stable Funding Ratio ranged 114.6–120.3 (2018–2023) then 118.2 (2024) and 113.3 (Sep-2025); Liquidity Coverage Ratio 253.6 (2018) to 153.0 (Sep-2025).
  - Market risk indicators: Foreign Currency Assets to Foreign Currency Liabilities and Foreign Currency Loans to Foreign Currency Deposits series shown.

### Key Macroeconomic Indicators and Projections (Selected from Table 1, 2022–30)
- Oil and Gas Sector:
  - Average crude oil export price (US$/barrel): 95.48 (2022), 82.38 (2023), 81.27 (2024), 70.66 (2025), 62.16 (2026), 62.26 (2027), 63.26 (2028), 64.46 (2029), 65.3 (2030).
  - Crude and condensates oil production (millions of barrels/day): 1.064 (2022), 1.049 (2023), 0.995 (2024), 1.005 (2025), 1.048 (2026), 1.09 (2027), 1.14 (2028), 1.176 (2029), 1.201 (2030).
  - Natural gas production (millions of cubic meters per day): 137.2 (2022), 142.5 (2023), 149.2 (2024), 152.3 (2025), 155.5 (2026), 159.3 (2027), 163.1 (2028), 167.0 (2029), 171.0 (2030).
- National Accounts:
  - Nominal GDP (US$ billions): 109.9 (2022), 106.2 (2023), 107.1 (2024), 106.5 (2025), 107.5 (2026), 112.4 (2027), 118.2 (2028), 124.5 (2029), 130.9 (2030).
  - Real GDP (annual percent change): 8.0 (2022), 1.4 (2023), 1.6 (2024), 2.8 (2025), 3.8 (2026), 3.8 (2027), 3.9 (2028), 3.6 (2029), 3.4 (2030).
  - Real hydrocarbon GDP: 8.7 (2022), 0.3 (2023), -1.9 (2024), 1.1 (2025), 4.0 (2026), 3.7 (2027), 4.2 (2028), 2.9 (2029), 2.1 (2030).
  - Real nonhydrocarbon GDP: 7.7 (2022), 2.0 (2023), 3.3 (2024), 3.5 (2025), 3.7 (2026), 3.8 (2027), 3.8 (2028), 3.9 (2029), 4.0 (2030).
- Prices:
  - Consumer prices (average): 2.5 (2022), 1.0 (2023), 0.6 (2024), 1.0 (2025), 1.2 (2026), 1.5 (2027), 1.7 (2028), 1.8 (2029), 2.0 (2030).
- Fiscal:
  - Revenue and grants (% of GDP): 41.4 (2022), 34.2 (2023), 31.9 (2024), 29.5 (2025), 28.3 (2026), 27.8 (2027), 27.6 (2028), 27.3 (2029), 26.9 (2030).
  - Hydrocarbon revenue (% of GDP): 33.7 (2022), 25.6 (2023), 23.4 (2024), 20.4 (2025), 19.2 (2026), 18.8 (2027), 19.0 (2028), 18.9 (2029), 18.5 (2030).
  - Expenditure (% of GDP): 30.9 (2022), 27.4 (2023), 28.6 (2024), 28.8 (2025), 28.2 (2026), 27.2 (2027), 25.9 (2028), 25.2 (2029), 24.2 (2030).
  - Overall balance (Net lending/borrowing, % of GDP): 10.5 (2022), 6.8 (2023), 3.3 (2024), 0.7 (2025), 0.1 (2026), 0.6 (2027), 1.7 (2028), 2.1 (2029), 2.7 (2030).
  - Central government debt (% of GDP): 41.7 (2022), 37.4 (2023), 35.4 (2024), 35.8 (2025), 35.9 (2026), 34.7 (2027), 33.3 (2028), 32.0 (2029), 29.8 (2030).
  - Net financial assets (% of GDP): -12.9 (2022), -7.4 (2023), -1.9 (2024), -1.4 (2025), -1.9 (2026), -1.9 (2027), 0.1 (2028), 2.5 (2029), 5.2 (2030).
- External:
  - Exports of goods (% of GDP): 65.7 (2022), 59.5 (2023), 65.2 (2024), 59.7 (2025), 58.1 (2026), 60.3 (2027), 62.9 (2028), 65.2 (2029), 68.0 (2030).
  - Imports of goods (% of GDP): 34.7 (2022), 35.2 (2023), 39.5 (2024), 39.9 (2025), 39.8 (2026), 40.0 (2027), 40.7 (2028), 41.7 (2029), 43.1 (2030).
  - Current account balance (US$ billions): 4.0 (2022), 2.4 (2023), 3.5 (2024), -1.2 (2025), -3.4 (2026), -1.7 (2027), 0.2 (2028), 0.9 (2029), 1.6 (2030).
  - Current account balance (percent of GDP): 3.7 (2022), 2.3 (2023), 3.2 (2024), -1.1 (2025), -3.1 (2026), -1.5 (2027), 0.2 (2028), 0.7 (2029), 1.2 (2030).
  - Central Bank gross reserves (US$ billions): 17.6 (2022), 17.5 (2023), 18.4 (2024), 19.3 (2025), 17.8 (2026), 17.4 (2027), 18.4 (2028), 19.4 (2029), 20.9 (2030).
  - Total external debt (US$ billions): 70.0 (2022), 65.8 (2023), 62.2 (2024), 62.0 (2025), 61.4 (2026), 60.7 (2027), 59.3 (2028), 58.6 (2029), 57.3 (2030).
  - Total external debt (% of GDP): 63.7 (2022), 61.9 (2023), 58.0 (2024), 58.2 (2025), 57.1 (2026), 54.0 (2027), 50.1 (2028), 47.0 (2029), 43.8 (2030).

### Selected Government Finance Tables (highlights)
- Table 2a (Millions of Omani Rials, central government operations, 2022–30) key lines:
  - Revenue and Grants (2022–2030): 17,506; 13,981; 13,160; 12,094; 11,689; 12,020; 12,549; 13,059; 13,530.
  - Oil receipts: 10,688 (2022), 8,594 (2023), 7,835 (2024), 6,724 (2025), 6,281 (2026), 6,427 (2027), 6,832 (2028), 7,181 (2029), 7,434 (2030).
  - Expenditure total: 13,058 (2022), 11,185 (2023), 11,799 (2024), 11,797 (2025), 11,640 (2026), 11,758 (2027), 11,777 (2028), 12,051 (2029), 12,190 (2030).
  - Net Lending/Borrowing (overall balance): 4,448 (2022), 2,796 (2023), 1,360 (2024), 297 (2025), 492 (2026), 617 (2027), 711 (2028), 1,008 (2029), 1,339 (2030).
  - Memorandum: Total government debt (end-period, millions): 17,611 (2022), 15,251 (2023), 14,600 (2024), 14,683 (2025), 14,820 (2026), 14,989 (2027), 15,141 (2028), 15,295 (2029), 14,982 (2030).

### Monetary Survey (selected, Table 3)
- Broad Money (end of period, Millions of OMR): 20,335 (2022), 23,001 (2023), 24,869 (2024), 24,959 (2025), 26,718 (2026), 28,334 (2027), 29,979 (2028), 31,822 (2029), 33,472 (2030).
- Net Foreign Assets (Millions of OMR): 4,615 (2022), 6,245 (2023), 7,184 (2024), 7,576 (2025), 7,041 (2026), 6,916 (2027), 7,356 (2028), 7,832 (2029), 8,449 (2030).
- Credit to the private sector (Millions of OMR): 24,423 (2022), 25,567 (2023), 27,065 (2024), 28,721 (2025), 30,360 (2026), 32,157 (2027), 34,055 (2028), 36,120 (2029), 38,325 (2030).
- Claims on Private Sector / GDP: 58.4 (2022), 63.2 (2023), 66.7 (2024), 71.2 (2025), 74.6 (2026), 75.6 (2027), 76.1 (2028), 76.7 (2029), 77.3 (2030).

### Balance of Payments Summary (selected, Table 4)
- Trade Balance (Millions of USD): 30,975 (2022), 24,377 (2023), 25,662 (2024), 19,819 (2025), 18,303 (2026), 20,253 (2027), 22,213 (2028), 23,555 (2029), 24,884 (2030).
- Exports (Millions of USD): 65,722 (2022), 59,547 (2023), 65,152 (2024), 59,742 (2025), 58,055 (2026), 60,263 (2027), 62,917 (2028), 65,239 (2029), 68,013 (2030).
  - Hydrocarbons: 45,620 (2022), 40,362 (2023), 44,510 (2024).
- Imports, f.o.b. (Millions of USD): 34,746 (2022), 35,170 (2023), 39,490 (2024), 39,923 (2025).
- Current Account Balance (Millions of USD): 4,010 (2022), 2,432 (2023), 3,469 (2024), -1,168 (2025), -3,353 (2026), -1,700 (2027), 224 (2028), 869 (2029), 1,625 (2030).
- Central Bank gross reserves (Millions of USD): 17,621 (2022), 17,499 (2023), 18,383 (2024), 19,304 (2025), 17,804 (2026), 17,352 (2027), 18,359 (2028), 19,445 (2029), 20,883 (2030).
- Total external debt (Millions of USD): 69,950 (2022), 65,754 (2023), 62,189 (2024), 62,004 (2025), 61,359 (2026), 60,739 (2027), 59,223 (2028), 58,571 (2029), 57,302 (2030).

### Financial Soundness Indicators (Table 5 highlights)
- Capital adequacy and asset quality metrics (2018–Sep-2025) summarized above under Banking Sector Soundness.
- Additional FSIs include Lending Ratio, Customer Deposits to Total Assets, Net Stable Funding Ratio, Liquidity Coverage Ratio, and market risk measures captured for 2018–Sep-2025.

*Sources: Country authorities; Central Bank of Oman; Ministry of Finance; Bloomberg L.P.; Haver Analytics; IMF staff estimates and projections.*

### Annex I. Implementation of 2024 Article IV Recommendations

### Annex I. Implementation of 2024 Article IV Recommendations

### Fiscal
- Advance nonhydrocarbon revenue mobilization and continue rationalizing spending.
  - A personal income tax law was passed in June 2025, with implementation expected in 2028.
  - The implementation of the minimum global tax of 15 percent is expected to take effect from January 1, 2025, following the Royal Decree introducing a Domestic Minimum Top-Up Tax and an Income Inclusion Rule in line with OECD Pillar 2 rules. The executive regulations for the implementation are yet to be issued.
  - The Tax Administration Modernization Program continues to advance, including the launch of the e-invoicing project in May 2025, with implementation expected in late 2026.
  - Efforts to reduce energy subsidies continue, underpinned by reforms to lower electricity costs and increase renewables energy, which now account for 12 percent by mid-2025—up from 5 percent in 2024.
- Strengthen fiscal institutions.
  - Fiscal risks have been identified and incorporated in the 2025 Budget document.
  - Work is underway on the new Medium-Term Fiscal Plan for 2026-2030, alongside effort to develop a fiscal rule and align fiscal reporting with GFSM 2014.
- Develop a full-fledged sovereign assets and liability management (SALM) framework.
  - Efforts are spearheaded by the Debt Management Committee to establish a SALM framework in line with the recommendations of a recent Fund TA.
  - A national asset registry has been established.
- Publishing a Medium-Term Debt Management Strategy (MTDS).
  - The MTDS is yet to be published.

### Monetary
- Strengthen the monetary policy framework and reduce excess liquidity.
  - Supported by Fund TA in late 2024, CBO’s Monetary Policy Enhancement Project is advancing, including work to adopt an interest rate corridor and launch open market operations.
  - The liquidity forecasting model is expected to be operationalized during 2026.
  - Work on the ELA framework is almost complete.

### Financial sector and supervision
- Strengthen regulatory and supervisory frameworks.
  - A new Banking Law was passed in January 2025, bringing the supervisory framework more in line with international standards and providing more flexibility to the CBO to set prudential requirements.
  - Regulatory requirements on promoting sustainable and green financial practices have been published and will come into effect in 2026.
- Lift the interest rate cap on personal loans.
  - The cap remains in place.
- Develop the financial sector.
  - The new Banking Law supports fintech development by setting the regulatory framework for digital banks, including licensing categories and capital requirements.

### Structural reforms and institutions
- Improve the quality of institutions.
  - Ongoing SOE governance reforms are strengthening governance and transparency in public asset management.
- Increase trade integration.
  - Progress continues on regional connectivity and trade. The UAE–Oman cross-border railway (Hafeet Rail) advanced with contracts awarded in early 2025 and construction underway.
  - Negotiations on the India-Oman FTA have concluded and are now pending formal signing.
- Address labor market bottlenecks.
  - Introduced a new framework for part-time employment (January 2025).
- Enhance the business environment.
  - The Court of Investment and Commerce was established in March 2025 to resolve business-related disputes.
  - OIA continued its planned divestments throughout 2025, while OIA’s Future Fund Oman began operations, supporting venture capital, SMEs, and startups.
- Develop SMEs for job creation and growth.
  - The Small and Medium Enterprises Development Authority developed several initiatives in 2025, including allocating at least 10 percent of government tenders to SMEs, reducing registration fees at the Tender Board by 50 percent, and paying SME invoicing within 15-28 days for government projects.
- Stepping up digitalization.
  - In May 2025, a general AI policy was published by Ministry of Transport, Communications, and Information Technology mandating, among others: responsible use of AI, human oversight in sensitive areas, bias mitigation.

*Annex I. Implementation of 2024 Article IV Recommendations*

### Annex III. Table 2. Oman: Debt Coverage and Disclosures

### Annex III. Table 2. Oman: Debt Coverage and Disclosures

### Debt structure, projections, and key fiscal flows
- Public debt (percent of GDP): 2024 35.4; 2025 35.8; 2026 35.9; 2027 34.7; 2028 33.3; 2029 32.0; 2030 29.8; 2031 29.9; 2032 28.8; 2033 28.2; 2034 28.2
- Change in public debt (percent of GDP): -1.9; 0.4; 0.0; -1.2; -1.4; -1.4; -2.2; 0.2; -1.2; -0.5; -0.1
- Contribution of identified flows (percent of GDP): -3.9; -1.0; -1.2; -1.4; -1.6; -1.4; -2.2; 0.1; -1.2; -0.6; -0.1

- Primary deficit (percent of GDP): -3.6; -0.9; 0.0; -0.8; -2.3; -2.8; -3.2; -3.8; -3.8; -2.5; -2.4
- Noninterest revenues (percent of GDP): 29.9; 27.5; 26.0; 25.9; 26.2; 26.0; 25.7; 25.1; 24.5; 22.5; 21.8
- Noninterest expenditures (percent of GDP): 26.3; 26.6; 26.0; 25.1; 24.0; 23.2; 22.4; 21.3; 20.7; 20.0; 19.4

- Automatic debt dynamics (percent of GDP): 1.6; 0.6; 0.2; -0.1; -0.4; -0.2; -0.2; 0.0; 0.0; -0.1; -0.1
  - Real interest rate and relative inflation (percent of GDP): 1.4; 1.6; 1.5; 1.1; 0.9; 1.0; 0.8; 0.8; 0.8; 0.7; 0.7
  - Real interest rate (percent of GDP): 2.2; 3.0; 2.7; 1.4; 1.1; 1.0; 0.8; 0.9; 0.9; 0.8; 0.8
  - Relative inflation (percent of GDP): -0.8; -1.4; -1.2; -0.2; -0.2; 0.0; 0.0; -0.1; -0.1; -0.1; -0.1
  - Real growth rate (percent of GDP): -0.6; -0.9; -1.3; -1.3; -1.3; -1.2; -1.1; -0.8; -0.8; -0.8; -0.8

- Other identified flows (percent of GDP): -2.0; -0.7; -1.3; -0.5; 1.1; 1.6; 1.2; 3.9; 2.6; 1.9; 2.4
  - Contingent liabilities (percent of GDP): 0.0 across series shown
  - Interest revenues (percent of GDP): -2.0; -2.0; -1.9; -1.9; -1.3; -1.3; -1.2; -1.1; -1.1; -1.0; -1.0
  - Other transactions (percent of GDP): 0.0; 1.2; 0.6; 1.4; 2.4; 2.8; 2.4; 5.1; 3.7; 3.0; 3.4

- Contribution of residual (percent of GDP): 2.0; 1.4; 1.2; 0.2; 0.2; 0.0; 0.0; 0.1; 0.1; 0.1; 0.1

- Gross financing needs (percent of GDP): 1.6; -1.3; 3.9; 2.8; 0.6; 0.5; -0.2; -0.9; -1.1; -0.5; -0.6
  - of which: debt service (percent of GDP): 7.1; 1.6; 5.8; 5.4; 4.2; 4.5; 4.2; 4.1; 3.8; 3.0; 2.8
  - Local currency (percent of GDP): 2.9; 2.4; 2.1; 1.3; 1.0; 1.2; 1.5; 0.7; 1.1; 0.7; 1.3
  - Foreign currency (percent of GDP): 4.2; -0.8; 3.8; 4.2; 3.2; 3.3; 2.7; 3.4; 2.7; 2.3; 1.5

- Memo variables:
  - Real GDP growth (percent): 1.6; 2.8; 3.8; 3.8; 3.9; 3.6; 3.4; 2.8; 2.9; 2.9; 2.9
  - Inflation (GDP deflator; percent): -0.7; -3.2; -2.8; 0.8; 1.2; 1.6; 1.7; 1.4; 1.4; 1.4; 1.5
  - Nominal GDP growth (percent): 0.9; -0.6; 0.9; 4.6; 5.2; 5.3; 4.3; 4.3; 4.4; 4.4; 4.4
  - Effective interest rate (percent): 5.3; 5.2; 4.8; 4.9; 4.6; 4.8; 4.5; 4.6; 4.4; 4.3; 4.4

### Commentary on debt dynamics and market access
- Oman continues to maintain market access, with gradual progress in developing the local currency debt market. The share of domestic currency debt is projected to rise as market infrastructure deepens.
- Short-term debt (on a residual maturity basis) declined markedly in 2022, reflecting the government’s repayment of maturing domestic instruments—including treasury bills—and external obligations, supported by liability management operations.
- The average time to maturity is expected to lengthen in line with the authorities’ debt management strategy.
- Projected path: "General government debt is projected to decline over the medium term before stabilizing in the long run, supported by sustained primary surpluses, stable macroeconomic conditions, and a policy of steady, gradual debt repayment."
- "Other transactions" primarily capture below-the-line operations, reflecting the accumulation of government assets.

### Medium-term and long-term risk assessment highlights
- Debt fanchart index (DFI): 2.0
- GFN financeability index (GFI): 4.1
- Debt fanchart module: Fanchart width 115.11.7 (percent of GDP)
- Terminal debt-to-GDP x14.90.3 institutions index (as presented)
- Probability metrics:
  - Prob. of missed crisis, 2025-2030, if stress not predicted: 18.2 pct.
  - Prob. of false alarms, 2025-2030, if stress predicted: 39.8 pct.
- Risk signal assessments:
  - Risk signal: Moderate (debt fanchart)
  - Risk signal: Low (GFN financeability)
  - Final assessment: Medium-term risks are assessed as low despite a mechanical moderate signal.
- Stress test calibrations included in analysis:
  - Commodity price stress: a 30-percent oil price decline in the second projection year relative to baseline.
  - Contingent liability stress: a one-time call on guaranteed debt equal to 10 percent of banking sector assets in the same year.
  - Both shocks lead to a moderate increase in gross financing needs and debt-to-GDP ratios compared to baseline projections.

- Medium-term commentary: "Medium-term risks are assessed as low despite a mechanical moderate signal, supported by Oman’s sizable liquid and unencumbered financial assets that mitigate liquidity and solvency risks. The rating also reflects the country’s political and institutional stability, strong fiscal discipline and reform commitment, a broad investor base, and low debt and gross financing needs."

- Long-term commentary: "A key long-term debt risk for Oman stems from potential declines in hydrocarbon revenues due to resource depletion or an accelerated energy transition. Sustained reforms under Oman Vision 2040—aimed at reinforcing fiscal sustainability, building financial buffers, and diversifying the economy away from hydrocarbons—are critical to mitigating these risks. Notably, several committed investments in green hydrogen have begun to materialize, supporting the diversification agenda and enhancing fiscal resilience."

### Policy recommendations and contingency measures (drawn from RAM and commentary)
- Use available fiscal space to cushion shocks and, when needed, recalibrate macroprudential policies and reinforce prudential oversight to safeguard financial stability.
- Expedite the pace of fiscal reforms to mobilize nonhydrocarbon revenues and rationalize expenditures, particularly accelerating energy subsidy reforms.
- Continue building fiscal buffers underpinned by a credible medium-term fiscal framework.
- Accelerate structural reforms to diversify the economy and enhance resilience to oil price fluctuations; accelerate regional trade integration, including by strengthening trade with GCC and other neighboring countries.
- Mandate regular cyber stress testing and strengthen supervisory oversight and incident reporting for banks and financial institutions.
- Adopt a fiscal strategy anchored by a credible and binding medium-term fiscal framework, endorsed at the highest level of policymaking.
- Expedite implementation of the climate agenda, particularly by rolling out the adaptation actions of the National Strategy for Adaptation and Mitigation to Climate Change (2020-2040).

*Source: IMF staff estimates and projections as presented in Annex III. Table 2. Oman: Debt Coverage and Disclosures.*

### Annex V. Downside Oil Price Scenario

### Annex V. Downside Oil Price Scenario

### Oil price shock
- Oil prices are assumed to fall to an average of $40 per barrel in 2026, before gradually approaching their baseline level of $67.3 per barrel by 2030.
- This shock corresponds to a decline in oil prices of about 36 percent compared to the baseline under November 2025 IMF staff macroeconomic framework.
- The shock is roughly equivalent to half the loss in oil prices recorded at the onset of the Global Financial Crisis.
- For simplicity, the simulation assumes hydrocarbon GDP remains at its level under the baseline scenario.
- Growth in trading partners is maintained at its baseline level.
- The authorities are assumed to undertake no active policy response.

### Macroeconomic impact — summary findings
- Non-hydrocarbon GDP growth:
  - Weakens to 2.6 percent in 2026.
  - Estimated at 3.5 percent in 2027.
  - These represent reductions of 1.1 percentage points below baseline in 2026 and 0.3 percentage points in 2027.
  - Non-hydrocarbon growth approaches its baseline level of 4.0 percent by 2030.
- Fiscal balance:
  - Turns into a deficit of 7.3 percent of GDP in 2026 (compared to a surplus of 0.1 percent of GDP under the baseline).
  - Remains in deficit in 2027 at -1.6 percent of GDP.
  - Returns to surplus from 2028 onward.
- Government net financial assets:
  - Drawn down to about -12.0 percent of GDP in 2026 (compared to -1.9 percent of GDP under the baseline).
  - Improve to 4.6 percent of GDP in 2027 as the fiscal balance recovers.
  - Over 2025-2030, net financial assets are expected to improve by 7.2 percentage points but remain 9.8 percentage points below their baseline level in 2030.
- Current account balance:
  - Posts a large deficit of 14.5 percent of GDP in 2026.
  - This deficit is estimated 11.4 percentage points wider than under the baseline.
  - Transitions to near balance in 2028 and to surplus from 2029 onward as oil prices recover.

### Scenario mechanics and assumptions
- Fiscal and current account balances are impacted through:
  - The decline in oil prices (direct hydrocarbon revenue loss).
  - Adjustment in nonhydrocarbon activities (weaker real income and sentiment).
- It is assumed that the authorities would utilize available government cash deposits to finance the temporary fiscal deficit, continuing transfers to FFO (implied in the simulation), thereby drawing down buffers.
- The analysis is conducted within a partial equilibrium framework and does not account for potential spillovers from a sharp decline in oil prices on trading partners.

### Key numerical outcomes (explicit)
- Oil price path:
  - $40 per barrel in 2026 (scenario), baseline $67.3 per barrel by 2030.
  - Decline of about 36 percent vs baseline.
- Non-hydrocarbon GDP growth:
  - 2.6 percent in 2026.
  - 3.5 percent in 2027.
  - Baseline 4.0 percent by 2030.
- Fiscal balance:
  - -7.3 percent of GDP in 2026 (scenario) vs +0.1 percent of GDP under baseline.
  - -1.6 percent of GDP in 2027.
  - Surplus from 2028 onward.
- Government net financial assets:
  - -12.0 percent of GDP in 2026 (scenario).
  - -1.9 percent of GDP under baseline (2026 baseline comparator).
  - 4.6 percent of GDP in 2027.
  - Improvement of 7.2 percentage points over 2025-2030 but remain 9.8 percentage points below baseline level in 2030.
- Current account balance:
  - -14.5 percent of GDP in 2026 (scenario).
  - Worsened by 11.4 percentage points relative to baseline.
  - Near balance in 2028; surplus from 2029 onward.

*Prepared by Mohamed Belkhir and Muhammad Ejaz; IMF staff calculations.*

### Annex VII. Figure 1. Oman: AI Exposure and Complementarities

### Annex VII. Figure 1. Oman: AI Exposure and Complementarities

### Overview
- Sources: NCSI, ILO, IMF staff calculations.
- Note: complementarity-exposure classification is based on analytical framework of Felten et. Al (2021) and Pizzinelli (et. Al) adopted in IMF Selected Issues Paper (SIP/2025/018).
- Key comparative findings:
  - "Oman’s AI exposure is less compared to EM and AE"
  - "Relative to front runners in GCC, Oman’s labor market is less exposed to AI"

### Occupational patterns and trends
- "Share of high skilled occupations (managers) has increased"
- "AI benefiting occupation grew in private sector."
- AI Exposure and Complementarity by occupation (higher value = higher exposure/complementarity). Occupations shown in figure include:
  - Craft and related trades workers
  - Professionals
  - Elementary occupations
  - Plant and machine operators
  - Services and sales workers
  - Technicians
  - Clerks
  - Managers
  - Skilled agricultural workers
- Bubble chart interpretation note: "Bubble size represents share in employment"

### Nationality and gender differences
- AI Exposure by Nationality and Gender, 2024 (Share of employment) findings presented:
  - Categories shown: Non-Omani, Omani, Oman (2020), Omani Female, Omani Male
  - Classification buckets: Low exposure; High exposure, low comp.; High exposure, high comp.
- Summary statement: "Omani nationals—especially women—face higher AI exposure but also stronger complementarity."

### Education and workforce composition
- AI Exposure by Education Level in Omani Workforce (Share of employment) categories:
  - University and above
  - Pre-U Diploma
  - Secondary
  - Below secondary
  - Classification buckets: Low exposure; High exposure, low comp.; High exposure, high comp.
- Employment by levels of Education (Millions, Workers) time series 2020–2024 with categories shown in figure:
  - Technical
  - Read/Write
  - Higher Education
  - Residual
- Definition note: "Higher Education= Ph.D/Masters/Bachelors, Technical=Higher diploma, general diploma, and less than general diploma. Residual=no qualification/not stated."

### Key statistic
- "The number of workers with higher education has increased by 31 percent over 2020-2024."

### Visual and measurement notes
- Repeated source and note: Sources: NCSI, ILO, IMF staff calculations. Note: complementarity-exposure classification is based on analytical framework of Felten et. Al (2021) and Pizzinelli (et. al) adopted in IMF Selected Issues Paper (SIP/2025/018).
- Chart axes and scales referenced in figures: Exposure and Complementarity axes (values shown in figures range approximately from -0.2 to 1.2 in the occupational chart); AI Exposure and Complementarity (Share of employment) scales from 0 to 1 for country and GCC comparisons.
- Comparative country panel includes Oman, Qatar, UAE in GCC comparison figures.

*Source: Annex VII. Figure 1. Oman: AI Exposure and Complementarities (NCSI, ILO, IMF staff calculations).*

### Annex VIII. Table 3. Oman: Table of Common Indicators Required for Surveillance

### Annex VIII. Table 3. Oman: Table of Common Indicators Required for Surveillance

### Data Provision and Coverage
- As of Nov 18, 2025: Data provision to the Fund; publication under the Data Standards Initiatives through the National Summary Data Page.
- Exchange Rates; International Reserve Assets and Reserve Liabilities of the Monetary Authorities documented.

### Fund Relations and Financial Position
- Membership Status: Joined December 23, 1971; Article VIII.
- General Resources Account (SDR Million; % Quota):
  - Quota: 544.40; 100.00
  - IMF's holdings of currency: 402.74; 73.98
  - Reserve tranche position: 141.70; 26.03
- SDR Department (SDR Million; % Allocation):
  - Net cumulative allocation: 700.60; 100.00
  - Holdings: 721.13; 102.93
- Outstanding Purchases and Loans: None
- Latest Financial Commitments: None
- Projected Payments to the Fund (SDR Million; based on existing use of resources and present holdings of SDRs):
  - Principal (Forthcoming): 2025 0.0; 2026 0.0; 2027 0.0; 2028 0.0
  - Charges/interest (Forthcoming): 2025 0.0; 2026 0.0; 2027 0.0; 2028 0.0
  - Total (Forthcoming): 2025 0.0; 2026 0.0; 2027 0.0; 2028 0.0
- Lending to the Fund and Grants:
  - RST: Oman contributed SDR 40 million to the RST in 2023.
  - PRGT subsidy resources: In 2023, Oman finalized contribution agreement for SDR 18 million from net investment earnings from an investment of SDR 29 million with the PRGT’s Long-Term Investment Strategy.
- Implementation of HIPC Initiative, MDRI, CCR: Not applicable.
- Resident Representative: No resident representative is stationed in Oman.

### Exchange Rate Arrangement and Article IV Consultations
- De jure and de facto exchange rate arrangements: Classified as a conventional peg.
- Exchange rate: Omani rial pegged to the U.S. dollar at RO 1 = $2.6008.
- Central bank fixed buying/selling rates for the U.S. dollar: RO 1 = $2.5974/2.6042.
- Article VIII obligations: Accepted under Article VIII, Section 2(a), 3, and 4.
- Article IV consultation cycle: Standard annual; previous consultation held October 30–November 13, 2024; staff report published January 22, 2025 (Country Report/25/13).

### Technical Engagements and IMF Support (selected since 2015)
- FSAP: Joint IMF-World Bank FSAP visits in May and August (updated assessment since 2011).
- ROSC and reassessments: Data ROSC February 2004; ROSC reassessment November 2014.
- Fund technical assistance (selected entries and dates as listed): LEG AML/CFT Framework January 2015; STA National Accounts Statistics March 2015; STA Import Price Index November 2015; STA Balance of Payments Statistics December 2015; FAD Medium-Term Fiscal Framework August 2016; and numerous subsequent missions through December 2025 (see timeline entries).
- Notable recent TA entries: ICD Macroeconomic Framework January 2025; STA External Sector - BOP December 2025; FAD TADAT - workshop December 2025.

### Recent Economic Developments and Outlook
- Growth:
  - Overall economic growth: 1.6 percent in 2024; 2.2 percent by September 2025.
  - Nonhydrocarbon growth: 3.3 percent in 2024 (up from 2 percent in 2023); 3.4 percent by September 2025.
- Inflation: 0.6 percent in 2024; 0.9 percent through November 2025.
- Fiscal balance:
  - Fiscal balance: 3.3 percent of GDP in 2024; 4.5 percent by September 2025.
- Debt:
  - Debt-to-GDP ratio: 35.8 percent by September 2025.
- External sector:
  - Current account surplus: 3.2 percent of GDP in 2024.
  - External position: Set to strengthen over the medium term; external position standing at 106 percent of the ARA metric.
- Credit ratings and investor confidence: Restoration of Oman’s investment-grade rating by all three major agencies.
- Strategic planning:
  - In January 2026, Oman launched the 11th Five-Year Development Plan (2026–2030) aligned with Oman 2040 Vision.
  - Plan priorities: Trade diversification, employment generation, mining, food security, health, education, renewable energy.
  - Monitoring: Advanced indicator dashboards developed with ESCWA and the Decision Support Unit.

### Fiscal Policy: Recent Performance and Reform Agenda
- Fiscal trends:
  - Fiscal deficit of 15.7 percent of GDP in 2020 reversed to a surplus of 1.9 percent in 2024.
  - Expected positive fiscal balance of 0.7 percent in 2025.
- Medium-Term Fiscal Plan (MTFP) for 2026–2030: Integrated into the 11th Development Plan; aims to maintain public debt within safe limits and strengthen reserves.
- Expenditure rationalization:
  - Electricity subsidies reduced to 43 percent of the total subsidy bill.
  - Fuel subsidies largely phased out.
  - Expenditure ceilings established for water and sanitation services.
- Social protection:
  - Universal social protection scheme introduced; features automatic adjustment mechanisms and expanded benefits (disability, sickness, unemployment).
  - Regular actuarial assessments and asset-liability evaluations planned.
- Revenue reforms and tax administration:
  - Tax Administration Modernization Program (TAMP): Phases one and two completed; phase three focusing on operational, monitoring, and evaluation frameworks.
  - Personal Income Tax targeted for 2028 (focused on high-income earners).
  - Tax revenues rose by 3 percent in Q3 2025.
  - E-invoicing set to be completed by end-2026.
  - Legislation enacted in 2025 to implement Pillar II of the OECD/G20 BEPS framework (Domestic Minimum Top-Up Tax and Income Inclusion Rule).
  - OECD Global Forum rating: “Largely Compliant” in June 2025.
- Debt management:
  - Debt-to-GDP ratio decline: From 67.9 percent in 2020 to 35.8 percent by September 2025.
  - Interest payments: Averaged 9 percent of total government expenditure between 2021 and 2024.
  - MTFP targets debt-to-GDP range: 31–40 percent of GDP.
  - Asset-liability management framework: Development underway with progress expected through 2026.

### Monetary and Financial Policy
- Exchange rate peg:
  - Peg remains appropriate as monetary anchor; supports inflation stability.
  - CBO aligns policy rate with the U.S. Federal Reserve.
- Legal and supervisory reforms:
  - New Banking Law enacted January 2025: Expands CBO’s statutory mandate; modernizes legal foundation for regulation and supervision; transitions to risk-based supervisory inspections; establishes consolidated supervision framework.
  - Bank Deposit Protection Law (BDPL) enacted 2024.
  - Financial Stability Committee established for systemic risk monitoring and coordination.
- FSAP and regulatory modernization:
  - 2025 voluntary FSAP assessment against revised Basel Core Principles (April 2024).
  - Progress toward full compliance with Basel IV requirements.
  - Monetary Policy Enhancement Project (MPEP): Phased transition to active liquidity management; Treasury Single Account implementation; development of a local bond market.
- Banking sector resilience:
  - Banks: Well-capitalized, liquid, and largely resilient to severe shocks.
  - Liquidity Coverage Ratio (LCR) stress tests: Most banks maintain strong liquidity; a few had minor overall shortfalls.
  - Basel III frameworks implemented: LCR, NSFR, definition of capital, leverage ratio, D-SIB framework.
- Consumer protection and credit frameworks:
  - Interest rate cap on personal loans maintained to protect households; contingent on credit rating framework enhancements and activation of credit rating systems.
- Payments and capital markets:
  - Modernized National Payment System: Multi-currency RTGS, instant mobile payments, Open Banking framework.
  - Capital market development: Increased non-bank corporate issuance via SOE IPOs; reforms to boost secondary market liquidity and Alternative Investment Market initiatives.
- AML/CFT:
  - Strengthened framework recognized by 2024 FATF Mutual Evaluation Report.
  - Deployment of CBO’s STRIX risk assessment tool; improved geographic risk understanding.

### Structural Policy and Diversification
- State-Owned Enterprises (SOEs):
  - Governance reforms, enhanced transparency, active privatization agenda.
  - SOE portfolio full state ownership reduced; SOE debt at 32.9 percent of GDP in 2025.
  - Oman Investment Authority continues oversight to improve SOE debt sustainability.
  - SOE mandates: Support SME ecosystem, attract FDI, deepen capital markets through issuances.
- SME development:
  - December 2025: Launch of National SME Funding Strategy.
  - Strategy features: Digital lending channels, government-backed guarantees, centralized accreditation system.
  - SME funding gap targeted: OMR 1.6 billion.
  - SME credit scoring system under development by Mala’a (the Credit Bureau).
- Labor market and social policies:
  - Automated labor clearance system; labor union strength reached level 3.
  - Wage Protection System (WPS) coverage: 70 percent of the workforce; noncompliance reduced by 20 percent y-o-y as of June 2025.
  - Reforms to boost women’s participation: Flexible work options; extended maternity and parental leave.
  - Priority: Integrate vocational training into education; align skills with Oman 2040 Vision sectors like green hydrogen and renewables.
- Energy transition and climate strategies:
  - National Strategy for Adaptation and Mitigation to Climate Change (2020–2040) and National Strategy for an Orderly Transition to Net Zero by 2050 in place.
  - Renewable power target: 40 percent of total power from renewables by 2040 (up from over 20 percent in 2025).
  - National Adaptation Plan launched with Green Climate Fund support.
  - Disaster risk reduction: National Multi-Hazard Early Warning System (NMHEWS) implemented.
  - Green hydrogen program and localization of supply chains prioritized.

### Conclusion and Policy Implications
- Oman’s economy has shown resilience with sustained nonhydrocarbon-led growth and macroeconomic stabilization.
- Authorities remain committed to:
  - Prudent fiscal management and growth-friendly consolidation.
  - Strengthening reserves and maintaining external sustainability and the USD peg credibility.
  - Structural reforms to support diversification, SME finance, labor market improvements, and energy transition.
- Key ongoing policy tools and reforms highlighted:
  - MTFP (2026–2030) and fiscal rule to keep public debt within safe limits.
  - Tax Administration Modernization Program and implementation of Pillar II BEPS measures.
  - Banking Law reforms, Basel compliance, and MPEP for monetary operations and liquidity management.
  - National SME Funding Strategy to close OMR 1.6 billion funding gap.
  - Renewable energy targets and climate adaptation frameworks to support long-term resilience.

*Prepared By Middle East and Central Asia Department; As of Nov 18, 2025 (information extracted from the staff report and informational annex).*

---


_Source: https://www.imf.org/-/media/files/publications/cr/2026/english/1omnea2026001-source-pdf.pdf_