## IMF Executive Board Concludes 2019 Article IV Consultation with Oman

_IMF News, July 3, 2019_

## Source details

**Canonical URL:** [IMF Executive Board Concludes 2019 Article IV Consultation with Oman](https://www.imf.org/en/news/articles/2019/07/03/pr19266-imf-executive-board-concludes-2019-article-iv-consultation-with-oman)

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## Bibliographic details
- Published: July 3, 2019

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### Overview
- Date: July 3, 2019
- Since the 2014 oil price shock, policy focus: strengthening the fiscal position, enhancing private sector‑led growth and employment, and encouraging diversification.
- Recovery drivers in 2018: rebound in oil prices and increased oil and gas production.

### Economic activity and projections
- Real non-hydrocarbon GDP growth: reached a low of ½ percent in 2017 and increased to about 1½ percent in 2018.
- Real hydrocarbon GDP growth: estimated 3.1 percent in 2018.
- Overall real GDP growth: 2.2 percent in 2018.
- Non-hydrocarbon growth projection: reach about 4 percent over the medium term, assuming continued diversification efforts.
- Selected projections (annual real GDP growth, annual percentage change):
  - 2018: 2.2
  - 2019: 0.3
  - 2020: 5.9
  - 2021: 2.1
  - 2022: 0.9
  - 2023: 1.4
  - 2024: 1.7

### Fiscal position and public debt
- Fiscal deficit estimated to have declined to about 9 percent of GDP in 2018 from 13.9 percent of GDP in 2017.
- Gross government debt increased by 7 percent of GDP in 2018 to 53.5 percent of GDP.
- Central government finances (percent of GDP):
  - Revenue and grants: 37.1 in 2018; projected 37.2 in 2019; 36.3 in 2020.
  - Hydrocarbon revenue: 29.2 in 2018; 27.7 in 2019; 27.6 in 2020.
  - Nonhydrocarbon and grants: 10.4 in 2018; 10.8 in 2019; 11.0 in 2020.
  - Expenditure: 46.3 in 2018; 44.3 in 2019; 43.3 in 2020.
  - Current expenditure: 36.0 in 2018; 34.8 in 2019; 35.1 in 2020.
  - Capital expenditure: 8.2 in 2018; 8.0 in 2019.
  - Overall balance (Net lending/borrowing): -9.0 in 2018; -7.2 in 2019; -7.0 in 2020.
- Non-hydrocarbon primary balance (in percent of non-oil GDP):
  - 2018: -48.6
  - 2019: -45.4
  - 2020: -42.2
  - 2021: -38.5
  - 2022: -36.6
  - 2023: -34.7
  - 2024: -32.9
- Total government debt trajectory:
  - 2018: 53.5
  - 2019: 58.7
  - 2020: 61.1
  - 2021: 62.2
  - 2022: 69.3
  - 2023: 73.1

### External sector and reserves
- Current account deficit estimate for 2018: -3.7 (in billions of U.S. dollars) and percent of GDP: -4.7.
- Current account projections (percent of GDP): 2019: -5.9; 2020: -4.0; 2021: -3.8; 2022: -4.9; 2023: -6.0; 2024: -6.7.
- Exports of goods (US$ billions):
  - 2018: 41.6
  - 2019: 39.9
  - 2020: 41.8
  - 2021: 43.9
  - 2022: 46.5
- Oil and gas component of exports (US$ billions):
  - 2018: 25.5
  - 2019: 24.3
  - 2020: 23.9
- Imports of goods (US$ billions): 2018: -23.5; 2019: -24.2; 2020: -25.1; 2021: -26.3; 2022: -27.7; 2023: -29.4; 2024: -31.3.
- Central Bank gross reserves (in months of next year's imports of goods and services):
  - 2016: 5.5
  - 2017: 5.8
  - 2018: 5.2
  - 2019: 4.4
  - 2020: 4.3

### Financial sector
- Private sector credit growth moderated: 5.6 percent in 2018.
- Banks: high capitalization, low non-performing loans, and strong liquidity buffers.
- Interest rates: increased due to U.S. monetary policy normalization.
- Directors urged continued attention to regulation and supervision and further efforts in enhancing the AML/CFT framework to support correspondent banking relationships.

### Executive Board assessment and policy recommendations
- Directors welcomed steps to enhance private sector growth, reduce spending growth, diversify government revenue, and improve the business environment.
- Concerns: public and external vulnerabilities have continued to grow; sovereign credit rating downgrades and increases in sovereign risk premia were noted.
- Fiscal policy recommendations:
  - Deeper fiscal adjustment to maintain confidence and ensure fiscal and external sustainability.
  - Expeditious introduction of VAT.
  - Measures to adjust government expenditure.
  - Lay out and implement an ambitious medium‑term fiscal adjustment plan based on:
    - Reforms to tackle current spending rigidities.
    - Streamlining public investment.
    - Raising non‑hydrocarbon revenue.
  - Prioritize measures that limit the impact on growth and place more of the adjustment on those who can best shoulder it.
  - Enhance fiscal governance and transparency; a formal medium‑term fiscal framework recommended to anchor consolidation and limit implementation risks.
  - Authorities’ plan to carry out a Public Expenditure Review with World Bank support described as useful.
- Exchange rate policy:
  - Exchange rate peg to the US dollar "had delivered low and stable inflation and remained appropriate."
  - Recommended fiscal adjustment seen as key to bringing the external position more in line with fundamentals and supporting the currency peg.
- Structural reforms:
  - Continue implementation of the Tanfeedh Program focusing on economic diversification and job creation.
  - Address labor market rigidities by better aligning public‑sector compensation with the private sector and addressing skills mismatches through higher quality education and training.
  - Encourage further SME development, including better access to finance, to raise productivity.

### Selected key indicators (highlights from data table)
- Oil and gas total production (US$ billions): 2015: 21.7; 2016: 16.0; 2017: 18.6; 2018: 26.6; 2019 (Proj.): 23.7.
- Average crude oil export price (US$/barrel): 2015: 56.5; 2016: 40.1; 2017: 51.3; 2018: 69.7; 2019 (Proj.): 65.1.
- Crude oil production (millions of barrels/day): 2015: 0.98; 2016: 1.00; 2017: 0.97; 2018: 1.09; 2019 (Proj.): 1.12.
- Nominal GDP (US$ billions): 2018: 79.3; 2019 (Proj.): 77.6; 2020 (Proj.): 80.3.
- Consumer prices (average): 2018: 1.8; 2019 (Proj.): 3.8; 2020 (Proj.): 3.4.
- Gross capital formation (percent of GDP): 2018: 31.5; 2019 (Proj.): 31.8; 2020 (Proj.): 32.0.
- Gross national savings (percent of GDP): 2018: 26.8; 2019 (Proj.): 25.9; 2020 (Proj.): 28.0.
- Total external debt (percent of GDP): 2018: 80.2; 2019 (Proj.): 86.8; 2020 (Proj.): 91.8.
- Nominal effective exchange rate (2010=100): 2015: 116; 2016: 117; 2017: 119; 2018: 118.

*IMF Executive Board press release, July 3, 2019.*

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## References

- [https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)
- [The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)
- [Oman and the IMF](http://www.imf.org/external/country/OMN/index.htm)
- [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2019/07/03/pr19266-imf-executive-board-concludes-2019-article-iv-consultation-with-oman_