{
  "title": "Oman: Staff Concluding Statement of the 2021 Article IV Mission",
  "publication": "IMF News, July 6, 2021",
  "sourceUrl": "https://www.imf.org/en/news/articles/2021/07/06/mcs070621-oman-staff-concluding-statement-of-the-2021-article-iv-mission",
  "canonical": "https://www.imf.org/en/news/articles/2021/07/06/mcs070621-oman-staff-concluding-statement-of-the-2021-article-iv-mission",
  "overlayPath": "/en/news/articles/2021/07/06/mcs070621-oman-staff-concluding-statement-of-the-2021-article-iv-mission/index.md",
  "summary": "Containment measures and health support limited COVID-19 cases and fatalities; cautious reopening helped contain new cases since early 2021.",
  "publishDate": "2021-07-06",
  "sections": [
    {
      "heading": "Economic Outlook",
      "content": "- Containment measures and health support limited COVID-19 cases and fatalities; cautious reopening helped contain new cases since early 2021.\n- Real GDP contracted by 2.8 percent in 2020; non-hydrocarbon growth was -3.9 percent and hydrocarbon GDP had a shallower decline.\n- Projections:\n  - Overall GDP is projected to grow around 2.5 percent in 2021.\n  - About 3 percent average growth over the medium term.\n  - Non-hydrocarbon GDP growth of 1.5 percent is projected for 2021.\n  - Non-hydrocarbon growth increases gradually over the medium term, reaching 4 percent in 2026.\n  - Inflation turned negative in 2020, expected to increase to 3 percent in 2021 given the introduction of VAT and recovery in aggregate demand, before declining to about 2.5 percent over the medium term.\n- Fiscal and external balances:\n  - Fiscal deficit deteriorated sharply in 2020 to about 19.3 percent of GDP.\n  - Fiscal balance projected to improve to -2.4 percent of GDP in 2021.\n  - Current account rose to 13.7 percent of GDP in 2020; expected to decline to 0.6 percent of GDP over the medium term.\n- Key uncertainties and risks:\n  - COVID-19 variants, oil price volatility, and potential social pressures from fiscal consolidation.\n  - Upside risks: strong vaccine roll-out and stronger global rebound; benefits from strong fiscal consolidation and structural reforms."
    },
    {
      "heading": "Near-Term Policies: Supporting Economic Recovery",
      "content": "- Main near-term priority: combating the pandemic until recovery is entrenched, including vaccine rollout.\n  - Authorities aim to vaccinate 70 percent of the targeted population by year-end.\n- Economic Stimulus Plan (adopted March 2021) provides and extends substantial support to affected sectors and strengthens the business environment.\n- Policy guidance:\n  - Maintain pandemic-related support measures until recovery is firmly established; withdraw individual measures carefully and coordinately.\n  - Explore strengthening insolvency and debt restructuring tools to facilitate resource reallocation.\n  - With oil prices higher than budgeted, scope exists for additional temporary targeted support for affected households and businesses without jeopardizing medium-term consolidation.\n  - Temporary social protection may help jobseekers not covered by the Job Security Scheme, given elevated female and youth unemployment rates.\n- Fiscal stance:\n  - 2021 adjustment of 4.3 percent of GDP in the non-hydrocarbon structural primary balance, primarily reflecting:\n    - 5 percent VAT introduced in April.\n    - Lower wage bill primarily from mandatory retirement.\n    - Reduction in water and electricity subsidies.\n    - Modest cuts in capital spending.\n  - Impact of consolidation mitigated by social spending and temporary reductions and waivers of taxes and fees.\n- Monetary/financial measures:\n  - Banks remain well-capitalized and liquid despite a slight increase in non-performing loans ratio and a decline in profitability.\n  - Credit risk is a concern; Central Bank of Oman should maintain forward-looking assessments of banks’ asset quality and ensure adequate capital buffers.\n  - Extending loan moratoria should be data-dependent and increasingly targeted to distressed but viable borrowers."
    },
    {
      "heading": "Fiscal Policy: Reinforcing Fiscal Sustainability",
      "content": "- Steadfast implementation of the Medium-Term Fiscal Plan (MTFP) is essential to reduce fiscal vulnerabilities and put debt on a downward path.\n  - MTFP targets elimination of the fiscal deficit over the medium term by boosting non-hydrocarbon revenue while keeping nominal fiscal expenditure broadly constant and improving efficiency and targeting.\n- Public communication and social safety net strengthening are essential to sustain public support for the MTFP and structural reforms.\n- Strengthening the medium-term fiscal framework:\n  - A target for the non-hydrocarbon structural primary balance could serve as an appropriate fiscal anchor, supplemented by a floor on government net financial assets.\n  - Expand fiscal risk analysis and sensitivity assessments to develop contingency plans for adverse shocks.\n  - Authorities have requested IMF technical assistance to help strengthen the medium-term fiscal framework.\n- Public financial management and fiscal governance improvements:\n  - Increase disclosures in quarterly fiscal reports (revenue, expenditure, financing).\n  - Add a tax expenditure assessment to the budget to strengthen transparency over tax incentives.\n  - Expand fiscal coverage beyond the budgetary central government to capture EDO and OIA activities and SOEs for a better picture of public sector sustainability.\n  - Develop a sovereign asset liability management framework given eroding financial buffers and the growing role of SOEs.\n  - Establishment of the Debt Management Committee to coordinate debt issuance and manage financial exposures is welcome.\n  - Authorities have requested IMF technical assistance to develop a medium-term debt strategy."
    },
    {
      "heading": "Monetary and Financial Policies: Safeguarding Financial Stability",
      "content": "- The exchange rate peg remains an appropriate policy anchor, delivering low and stable inflation.\n- The MTFP and structural reforms are critical to ensure external sustainability and support the exchange rate peg.\n- Regulatory and supervisory priorities:\n  - Strengthen the regulatory framework by grounding the Bank Resolution Framework (issued in 2019) in the Banking Law to provide legal certainty for effective resolution implementation.\n  - Monitor risks related to lending to the commercial real estate sector, which has been negatively impacted by the pandemic.\n  - Continue efforts to promote Fintech to enhance financial inclusion while containing risks."
    },
    {
      "heading": "Structural Reforms: Managing the Transition toward Stronger Growth",
      "content": "- Private sector competitiveness and productivity:\n  - Policies to enhance productivity, labor market flexibility, promote investment, and improve the business climate are on the right track.\n  - Carefully assess whether benefits of free trade zones outweigh the considerable tax exemptions granted.\n- Labor market reforms and measures:\n  - Simplified multiple minimum wages into a single minimum wage of OMR 325/month.\n  - Time-bound wage subsidy of OMR 200/month for first time Omani jobseekers to facilitate private sector employment of Omanis, initially expected to cover about 15,000 persons.\n  - Relaxation of restrictions on job transfers for expatriates.\n  - Job Security Fund—an unemployment benefit scheme—to facilitate worker reallocation between employers.\n  - Ongoing efforts to update the labor law to support labor market flexibility.\n  - Recommendations: increase female employment, ensure public sector wage growth does not outpace private sector, and implement plans to reduce the labor cost gap with caution.\n- SOE reform and governance:\n  - OIA’s plan to enhance efficiency and governance of SOEs and privatize some SOEs is progressing.\n  - Near-term priorities: publish audited financial statements, assess each entity’s business strategy and public policy role, mitigate intra-public sector financial exposures.\n  - OIA and Capital Market Authority are developing a Code of Governance for SOEs to strengthen corporate governance and facilitate IPOs and transparency.\n- Green transition:\n  - Authorities are reducing domestic electricity and water subsidies.\n  - Plans to utilize abundant wind and solar energy resources to attract investors and contribute to growth and job creation.\n\nOman: Staff Concluding Statement of the 2021 Article IV Mission (July 6, 2021).\n\n---\n\n\n References\n\n- Oman and the IMF\n- IMF Policy Advice -- A Factsheet\n- Mission Concluding Statements\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2021/07/06/mcs070621-oman-staff-concluding-statement-of-the-2021-article-iv-mission"
    }
  ],
  "bullets": [
    "[Markdown version](/en/news/articles/2021/07/06/mcs070621-oman-staff-concluding-statement-of-the-2021-article-iv-mission/index.md)",
    "[Structured JSON version](/en/news/articles/2021/07/06/mcs070621-oman-staff-concluding-statement-of-the-2021-article-iv-mission/index.json)",
    "[Bundle manifest](/en/news/articles/2021/07/06/mcs070621-oman-staff-concluding-statement-of-the-2021-article-iv-mission/bundle-manifest.json)",
    "Published: July 6, 2021",
    "Containment measures and health support limited COVID-19 cases and fatalities; cautious reopening helped contain new cases since early 2021.",
    "Real GDP contracted by 2.8 percent in 2020; non-hydrocarbon growth was -3.9 percent and hydrocarbon GDP had a shallower decline.",
    "Projections:",
    "Fiscal and external balances:",
    "Key uncertainties and risks:",
    "Main near-term priority: combating the pandemic until recovery is entrenched, including vaccine rollout.",
    "Economic Stimulus Plan (adopted March 2021) provides and extends substantial support to affected sectors and strengthens the business environment.",
    "Policy guidance:",
    "Fiscal stance:",
    "Monetary/financial measures:",
    "Steadfast implementation of the Medium-Term Fiscal Plan (MTFP) is essential to reduce fiscal vulnerabilities and put debt on a downward path.",
    "Public communication and social safety net strengthening are essential to sustain public support for the MTFP and structural reforms.",
    "Strengthening the medium-term fiscal framework:",
    "Public financial management and fiscal governance improvements:",
    "The exchange rate peg remains an appropriate policy anchor, delivering low and stable inflation.",
    "The MTFP and structural reforms are critical to ensure external sustainability and support the exchange rate peg.",
    "Regulatory and supervisory priorities:",
    "Private sector competitiveness and productivity:",
    "Labor market reforms and measures:",
    "SOE reform and governance:",
    "Green transition:",
    "[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)",
    "[Mission Concluding Statements](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
  ],
  "alternates": {
    "markdown": "/en/news/articles/2021/07/06/mcs070621-oman-staff-concluding-statement-of-the-2021-article-iv-mission/index.md",
    "json": "/en/news/articles/2021/07/06/mcs070621-oman-staff-concluding-statement-of-the-2021-article-iv-mission/index.json",
    "bundleManifest": "/en/news/articles/2021/07/06/mcs070621-oman-staff-concluding-statement-of-the-2021-article-iv-mission/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-26T00:31:36.431Z"
}