## IMF Staff Concludes Staff Visit to Oman

_IMF News, May 13, 2024_

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## Bibliographic details
- Published: May 13, 2024

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### Mission and context
- A staff team from the International Monetary Fund (IMF), led by Mr. Cesar Serra, visited Muscat, Oman, during April 30-May 8, 2024, to discuss economic and financial developments, the outlook, and the country’s policy priorities.
- End-of-Mission press release: views expressed 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.

### Economic activity, growth, and inflation
- Real GDP growth:
  - 2023: 1.3 percent (driven by expansion of nonhydrocarbon activities).
  - 2024 (projected): 0.9 percent (moderate growth, reflecting extended oil production cuts to the first half of 2024).
  - 2025 (projected): 4.1 percent (accelerating, supported by a rebound in hydrocarbon activity following expected relaxation of OPEC+ quotas).
- Nonhydrocarbon growth:
  - 2023: 2.1 percent.
  - 2024 (projected): 2.6 percent.
  - 2025 (projected): 3.2 percent.
- Inflation:
  - Average headline inflation decelerated from 0.9 percent in 2023 to nil during January-March 2024 (year-over-year), reflecting easing of core, food, and transport inflation.

### Fiscal position and public debt
- Fiscal balance:
  - 2023: surplus of 6.6 percent of GDP.
  - Forecast: remain in surplus over the medium term, supported by comfortable hydrocarbon receipts, increasing nonhydrocarbon revenues, and continued fiscal discipline.
- Central government debt:
  - 2023: 36.5 percent of GDP (reduced from 40.9 percent in 2022).
  - Net debt reduction in 2023: $6.1 billion (government used part of the fiscal surplus to prepay debt).
- State-owned enterprises (SOEs) debt:
  - Stabilized at around 31 percent of GDP.
  - Oman Investment Authority’s SOEs reform agenda: 9 divestments completed in 2023 with proceeds amounting to about $3 billion.

### External position and reserves
- Current account balance:
  - 2023: surplus of 1.4 percent of GDP.
  - Projected: set to remain in surplus over the medium term.
- Gross international reserves held by the Central Bank of Oman:
  - 2023: $17.5 billion (4.1 months of prospective goods and services imports).
  - Reserves supported by a surge in Foreign Direct Investment.
- Banks’ net foreign asset position turned positive in December 2023 for the first time since 2014, due to rising investments in foreign securities.

### Banking sector and financial stability
- Banking sector resilience:
  - Bank capital and liquidity ratios and profitability continue at comfortable levels.
  - Asset quality: strong.
  - Credit to the private sector: continued to expand.
  - Banks’ net foreign asset position: turned positive in December 2023.

### Outlook and risks
- Near- to medium-term outlook: favorable; risks broadly balanced.
- Upside risks:
  - Surge in oil prices (driven by supply and demand imbalances).
  - Accelerated reforms under Oman Vision 2040.
  - Committed investments from regional partners.
- Downside risks:
  - Further intensification of geo-political tensions in the region.
  - An abrupt global slowdown, particularly in China.
  - Higher-for-longer global interest rates.

### Structural reforms and policy priorities
- Progress under Oman Vision 2040:
  - Social protection and labor laws being rolled out.
  - SOEs divestment, deleveraging, and other SOEs reforms progressing as planned.
  - Climate-related investments on track to achieve renewable energy and green hydrogen targets over the medium term.
- Authorities’ priorities going forward:
  - Enhancing tax administration.
  - Continuing rationalizing fiscal expenditures.
  - Strengthening the medium-term fiscal framework.
  - Modernizing the monetary policy toolkit.
  - Deepening financial markets and supporting small and medium enterprises funding.
  - Accelerating digitalization.
- Reform objectives: accelerate diversification towards a greener, more inclusive, and knowledge-based economy.

*IMF Communications Department — Press Release No. 24/154 (May 13, 2024); statement issued by Mr. Cesar Serra at the conclusion of the mission.*

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## References

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_Source: https://www.imf.org/en/news/articles/2024/05/10/pr-24154-oman-imf-staff-concludes-staff-visit_