IMF Executive Board Concludes 2023 Article IV Consultation with Oman
IMF News, January 23, 2024
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Bibliographic details
- Published: January 23, 2024
Macroeconomic performance and outlook
- Economic growth:
- Economy grew by 4.3 percent in 2022.
- Growth slowed to 2.1 percent (year on year) in the first half of 2023.
- Real GDP: 2020: -3.4; 2021: 3.1; 2022: 4.3; 2023: 1.3; 2024 (Proj.): 1.4; 2025 (Proj.): 2.9; 2026 (Proj.): 3.5; 2027 (Proj.): 3.2; 2028 (Proj.): 3.0.
- Real hydrocarbon GDP 1/: 2020: -3.6; 2021: 5.2; 2022: 9.6; 2023: 0.0; 2024 (Proj.): -0.5; 2025 (Proj.): 2.5; 2026 (Proj.): 3.0; 2027 (Proj.): 2.0; 2028 (Proj.): 1.6.
- Real non-hydrocarbon GDP: 2020: -3.3; 2021: 1.9; 2022: 1.2; 2023: 2.1; 2024 (Proj.): 3.9; 2025 (Proj.): 4.0.
- Inflation and prices:
- Consumer prices (average): 2020: -0.9; 2021: 1.5; 2022: 2.8; 2023: 1.7; 2024 (Proj.): (table shows but not all years listed).
- Inflation receded from 2.8 percent in 2022 to 1.2 percent during January-September 2023.
- GDP Deflator: 2020: -10.8; 2021: 12.7; 2022: 24.6; 2023: -6.8; 2024 (Proj.): -0.7; 2025 (Proj.): -0.4; 2026 (Proj.): -0.1; 2027 (Proj.): 0.3.
- Oil and gas sector:
- Average crude oil export price (US$/barrel): 2020: 46.0; 2021: 64.3; 2022: 95.4; 2023: 80.0; 2024 (Proj.): 79.9; 2025 (Proj.): 76.0; 2026 (Proj.): 72.7; 2027 (Proj.): 69.9; 2028 (Proj.): 67.5.
- Crude and condensates oil production (in millions of barrels/day): 2020: 0.951; 2021: 0.971; 2022: 1.064; 2023: 1.048; 2024 (Proj.): 1.021; 2025 (Proj.): 1.050; 2026 (Proj.): 1.088; 2027 (Proj.): 1.110; 2028 (Proj.): 1.132.
- Natural gas production (in millions of cubic meters per day): 2020: 121.9; 2021: 132.2; 2022: 137.2; 2023: 146.4; 2024 (Proj.): 155.9; 2025 (Proj.): 159.2; 2026 (Proj.): 162.2; 2027 (Proj.): 167.1; 2028 (Proj.): 168.1.
Fiscal and external positions
- Fiscal outcomes:
- Overall fiscal balance estimated at 5.5 percent of GDP in 2023.
- (Table: Overall balance (Net lending/borrowing)): 2020: -15.7; 2021: -3.1; 2022: 10.1; 2023: 5.5; 2024 (Proj.): 3.7; 2025 (Proj.): 4.1; 2026 (Proj.): 4.4; 2027 (Proj.): 3.8; 2028 (Proj.): 3.3.
- (Table: (adjusted) 2/): 2020: -9.6; 2021: -0.8; 2022: (value not shown in excerpt).
- Revenue and grants (percent of GDP): 2020: 28.9; 2021: 33.0; 2022: 39.7; 2023: 31.8; 2024 (Proj.): 30.9; 2025 (Proj.): 30.4; 2026 (Proj.): 29.6; 2027 (Proj.): 28.5; 2028 (Proj.): 27.4.
- Hydrocarbon revenue (percent of GDP): 2020: 21.7; 2021: 25.9; 2022: 32.3; 2023: 23.6; 2024 (Proj.): 22.6; 2025 (Proj.): 22.0; 2026 (Proj.): 21.1; 2027 (Proj.): 20.0; 2028 (Proj.): 18.9.
- Public investment and saving (percent of GDP): Gross capital formation: 2020: 27.6; 2021: 22.4; 2022: 23.2; 2023: 24.4; 2024 (Proj.): 24.5; 2025 (Proj.): 25.3; 2026 (Proj.): 25.5; 2027 (Proj.): 26.3; 2028 (Proj.): 26.9.
- Gross national savings: 2020: 11.5; 2021: 17.0; 2022: 28.2; 2023: 27.2; 2024 (Proj.): 27.3; 2025 (Proj.): 27.7; 2026 (Proj.): 27.8; 2027 (Proj.): 28.1; 2028 (Proj.): 28.7.
- Public debt and external balances:
- Central government debt as a share of GDP declined from about 68 percent in 2020 to 38 percent in 2023. (Table: Central government debt): 2020: 67.9; 2021: 61.3; 2022: 39.9; 2023: 37.7; 2024 (Proj.): 35.7; 2025 (Proj.): 33.7; 2026 (Proj.): 31.9; 2027 (Proj.): 30.5; 2028 (Proj.): 29.4.
- Public debt (of which) 2020: 108.1; 2021: 102.0; 2022: 69.8.
- External sector (in billions of U.S. dollars): Exports of goods: 2020: 33.4; 2021: 44.3; 2022: 66.1; 2023: 60.2; 2024 (Proj.): 64.6; 2025 (Proj.): 65.6; 2026 (Proj.): 66.4.
- Current account balance (in billions of U.S. dollars): 2020: -12.3; 2021: -4.8; 2022: 5.8; 2023: 2.2.
- Current account balance (percent of GDP): 2020: -16.2; 2021: -5.4; 2022: 5.0; 2023: 1.8.
- Central Bank gross reserves (in billions of U.S. dollars): 2020: 15.0; 2021: 19.7; 2022: 17.6; 2023: 17.5; 2024 (Proj.): 18.4; 2025 (Proj.): 22.8.
- Total external debt: 2020: 72.8; 2021: 79.8; 2022: 70.0; 2023: 66.6; 2024 (Proj.): 63.5; 2025 (Proj.): 63.1; 2026 (Proj.): 61.5; 2027 (Proj.): 61.6.
Financial sector and risks
- Banking sector resilience:
- Profitability recovered to pre-pandemic levels.
- Capital and liquidity ratios are well above regulatory requirements.
- Non-performing loans remain low and sufficiently provisioned.
- Stress tests suggest banks are resilient to credit and liquidity shocks.
- Risks to the outlook:
- Upside risks:
- Higher oil prices from supply/demand imbalances.
- Acceleration of Vision 2040 reforms and investments from regional partners.
- Faster global disinflation leading to global monetary policy easing and stronger external demand.
- Downside risks:
- Sharp decline in oil prices, including from a deeper-than-expected economic deceleration in China.
- Slowdown in implementation of the reform agenda.
- Potential indirect spillovers from the ongoing conflict in Gaza and Israel.
- Overall assessment: Risks to the economic outlook are balanced.
Executive Board assessment and policy recommendations
- General judgment:
- Executive Directors agreed with the thrust of the staff appraisal.
- They commended macroeconomic management and broad reform efforts that strengthened fiscal and external positions, preserved financial stability, and lowered public debt.
- Directors noted the outlook remains favorable but emphasized continuing reforms to entrench fiscal sustainability and ensure intergenerational equity, while safeguarding financial stability and accelerating economic diversification.
- Fiscal policy recommendations:
- Continue prudent fiscal management while strengthening the social safety net, including through the new social protection law.
- Pursue the ongoing tax administration reform program.
- Phase out untargeted subsidies as a critical measure to enhance fiscal sustainability.
- Strengthen and institutionalize the medium-term fiscal framework.
- Enhance transparency of fiscal accounts, expand coverage, disclose fiscal risks, and develop a sovereign asset liability management framework.
- Monetary and exchange rate policy:
- Directors agreed the exchange rate peg continues to serve Oman well as a monetary anchor.
- Continue measures to strengthen the monetary transmission mechanism to support a more independent monetary policy regime in the future.
- Sustain progress under the Monetary Policy Enhancement Project.
- Financial sector policy:
- Further strengthen the regulatory framework to cement financial stability.
- Return the capital conservation buffer to pre-pandemic levels.
- Re-assess the list of domestic systemically important institutions.
- Further enhance the AML/CFT framework.
- Develop the financial sector to enhance access to finance and support economic diversification, including through enhanced digitalization while managing associated risks.
- Structural and reform priorities:
- Continue progress on Oman Vision 2040 to promote sustained, diversified, inclusive, and private sector-led growth.
- Maintain commitment to the ambitious climate agenda and invest in renewable energy.
- Improve institutional quality, reduce the state footprint, enhance the business environment.
- Commended passage of the new labor law and encouraged continued efforts to enhance labor market flexibility and empower women.
Institutional follow-up
- It is expected that the next Article IV consultation with Oman will be held on the standard 12-month cycle.
- Notes:
- [1] Explanation of Article IV consultation process provided in the release.
- [2] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors; an explanation of qualifiers is referenced in the release.
Source: IMF press release — "IMF Executive Board Concludes 2023 Article IV Consultation with Oman", January 23, 2024.
