## IMF Staff Concludes Staff Visit to Oman

_IMF News, June 19, 2023_

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## Bibliographic details
- Published: June 19, 2023

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### Economic outlook and inflation
- Real GDP grew by 4.3 percent in 2022, primarily driven by a strong expansion of the hydrocarbon sector.
- Economic growth projections:
  - 2023: 1.3 percent
  - 2024: 2.7 percent
- Non-hydrocarbon growth:
  - 2022: 1.2 percent
  - 2023 projection: 2 percent
  - 2024 projection: 2.5 percent
- Average headline inflation:
  - 2022 (year-over-year): 2.8 percent
  - January–April 2023 (year-over-year): 1.6 percent
- Factors cited for the 2023 slowdown and 2024 rebound:
  - Oil production cuts by OPEC+
  - Recovering but still subdued construction activity
  - A slowdown in global economic activity
  - Tighter financial conditions
  - Lower food inflation and a stronger US dollar (inflation drivers)

### Fiscal and external positions
- Fiscal balance:
  - Fiscal balance reached a surplus of 7.5 percent of GDP in 2022.
  - Expected to remain in surplus over the medium term on the back of favorable oil revenues and fiscal measures under the authorities’ Medium-Term Fiscal Plan.
- Central government debt:
  - 2021: 61.3 percent of GDP
  - 2022: 40 percent of GDP
  - Decline attributed to use of oil windfall to repay government debt.
- State-owned enterprises (SOEs) debt:
  - 2021: 40.7 percent of GDP
  - 2022: 28.8 percent of GDP
  - Decline attributed to asset divestments, improved performance, and debt repayments; risks mitigated by substantial assets under Oman Investment Authority’s management and ongoing reforms.
- Current account:
  - 2022: surplus of 5.2 percent of GDP (first surplus since 2014).
  - Projected to remain in surplus over the medium term.
- Gross international reserves held by the Central Bank of Oman:
  - $17.6 billion in 2022 (4.7 months of prospective imports).

### Banking sector
- The banking sector remains sound.
- Profitability has recovered from pandemic lows.
- Banks display ample capital and liquidity buffers.
- Asset quality remains strong while credit to the private sector continues to expand.

### Risks to the outlook
- Upside risks:
  - Accelerated production at the Duqm refinery project.
  - Another surge of oil prices—potentially triggered by supply and demand imbalances.
  - An acceleration of Vision 2040 reform plans.
  - A rise in foreign direct investments from regional partners.
- Downside risks:
  - A sharp decline in oil prices—due to a severe and protracted global economic slowdown.
  - Lower demand for hydrocarbons—due to a faster-than-expected global energy transition.
  - Pressures to spend the oil windfall.

### Policy priorities and structural agenda (Oman’s Vision 2040)
- Continue implementation of structural reforms to diversify the Omani economy and boost prospects for strong, inclusive, and green non-hydrocarbon growth.
- Priority areas identified:
  - Allowing for greater labor market flexibility
  - Enhancing social protection and insurance
  - Improving tax collection efficiency
  - Strengthening medium-term fiscal frameworks
  - Enhancing the performance and transparency of the SOE sector
  - Creating an investor-friendly business environment
  - Accelerating the pace of digitalization
  - Developing the financial sector
  - Investing in green energy to help address climate challenges and leverage the global energy transition

### Mission details and statement
- IMF staff team visit: Muscat, Oman, during June 6-14, 2023.
- Mission leader: Mr. Cesar Serra.
- Press release date: June 19, 2023; Press Release No. 23/217.
- End-of-Mission press release note: The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.

*IMF staff team statement as provided in the End-of-Mission press release.*

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## References

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_Source: https://www.imf.org/en/news/articles/2023/06/16/pr23217-imf-staff-concludes-staff-visit-to-oman_