IMF Staff Concludes Staff Visit to Oman

IMF News, June 16, 2022

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A staff team from the International Monetary Fund (IMF), led by Mr. Daniel Kanda, visited Muscat, Oman, during June 5-12, 2022 to discuss economic developments, the outlook, and the country’s policy priorities.
The mission is an End-of-Mission press release conveying preliminary findings. The views are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.

The Omani authorities undertook substantial and well-coordinated vaccination efforts and policy actions to mitigate the impact of the COVID-19 pandemic and foster the recovery.
Nearly all persons 12 years and older had been at least partially vaccinated and about 90 percent were fully vaccinated as of end-May 2022.
With declining infections, all COVID-19 related restrictions have been removed.
Targeted fiscal, monetary, and financial measures provided relief to households, firms, and banks.

Real GDP grew by 3 percent in 2021, largely driven by the buoyant hydrocarbon sector.
The economy is projected to grow by about 4.5 percent in 2022, benefiting from increased hydrocarbon production and continued recovery of non-hydrocarbon activities.
Inflation turned positive to 1.5 percent in 2021 and is projected to increase to 3.7 percent in 2022, given rebounding economic activity and rising global inflationary pressures.
There are limited direct trade or financial links to Russia and Ukraine.

The fiscal balance is expected to improve to a surplus of 5.5 percent of GDP in 2022, with surpluses persisting over the medium term owing to higher oil prices and continued consolidation under the authorities’ Medium-Term Fiscal Plan (MTFP).
Central government debt is expected to decline substantially from about 63 percent of GDP in 2021 to 45 percent of GDP in 2022.
The current account balance is projected to improve to a surplus of 6.8 percent of GDP in 2022, buoyed by oil exports.
International reserves held at the Central Bank of Oman (CBO) increased to US$19.7 billion (5.2 months of prospective imports) in 2021.

The banking system remains well-capitalized and liquid, benefiting from the strong buffers before entering the crisis and prudent oversight of the Central Bank of Oman (CBO).
The banking system has weathered the recent shocks relatively well, supported by substantial capital and liquidity buffers and the Central Bank of Oman’s continued efforts in strengthening regulatory and supervisory frameworks.

Downside risks highlighted:
- Uncertainty about the war in Ukraine and its impact on the global economy.
- A renewed flare-up of COVID-19 infections.
- Tighter-than-expected global financial conditions.
- Increased inflationary pressures from higher global food and energy prices.
- More persistent disruption in global supply chains.
- Pressures to spend the hydrocarbon windfall.
Upside risks:
- Higher-than-expected hydrocarbon windfall.
- Accelerated implementation of structural reforms under Vision 2040.
Policy priorities and recommendations:
- Sustain progress in implementing the authorities’ ambitious fiscal and structural reform plans to reinforce fiscal and external sustainability.
- Continue strong commitment to fiscal consolidation under the MTFP.
- Maintain structural reforms to reinforce fiscal and external sustainability.

“The IMF staff team would like to thank the Omani authorities and other counterparts for the open and candid discussions and their warm hospitality.”

IMF Staff Concludes Staff Visit to Oman — Press Release No. 22/204, June 16, 2022.