IMF Staff Concludes Staff Visit to Oman

IMF News, June 2, 2025

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A staff team from the International Monetary Fund (IMF), led by Mr. César Serra, visited Muscat, Oman, during May 21-29, 2025, to discuss economic and financial developments, the outlook, and the country’s policy priorities.
End-of-Mission press release conveying preliminary findings; views 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.

Real GDP growth:
- 2023: 1.2 percent
- 2024: 1.7 percent
- Projected 2025: 2.4 percent
- Projected 2026: 3.7 percent
Drivers of growth:
- Strengthened nonhydrocarbon activity, notably in manufacturing and services.
- Ongoing investments in logistics, manufacturing, renewable energy, and tourism.
- Phase-out of OPEC+ curbs expected to support medium-term expansion.
Inflation:
- 2024: 0.6 percent
- January–April 2025 (year-over-year): 0.9 percent
- Overall characterization: inflation remains low.

Fiscal balance:
- Fiscal surplus in 2024: 3.3 percent of GDP (noted as lower-than-previously estimated due to accelerated investments and lower dividends from Energy Development Oman).
- Projected average fiscal surplus during 2025–2026: 0.5 percent of GDP
- Medium-term: surplus expected to increase, supported by oil production resumption and continued fiscal reforms.
Public and SOE debt:
- Central government debt: 35.5 percent of GDP in 2024 (down from 37.5 percent in 2023).
- State-owned enterprises (SOE) debt: around 31 percent of GDP in 2024.
External balance:
- Current account balance: surplus of 2.2 percent of GDP in 2024.
- Projected average current account balance in 2025–2026: deficit of about 2 percent of GDP.
- Conditional outlook: return to surplus expected thereafter if oil production gradually rises to capacity.
Factors weighing on fiscal and external positions: lower oil prices and softer growth in nonhydrocarbon exports.

Banking sector soundness:
- Supported by strong asset quality, ample capital and liquidity ratios, and sustained profitability.
- Banks’ net foreign asset position remains positive.
- Private sector credit growth continues to be strong, underpinned by an expanding deposit base.
Risks to liquidity and credit:
- Higher-for-longer global interest rates and tighter-than-expected domestic liquidity—from subdued hydrocarbon revenues—could increase borrowing costs and reduce credit to the private sector.

Downside risks (tilted to the downside):
- Direct impact of global trade tensions expected to be limited given Oman’s modest exports to the U.S., but indirect effects could be more pronounced.
- Persistently high global uncertainty may dampen oil demand and prices, potentially triggering an extension of oil production cuts and sustained lower hydrocarbon proceeds.
- Weaker hydrocarbon proceeds would weaken growth and fiscal and external positions.
- Higher global interest rates and tighter domestic liquidity could further slow nonhydrocarbon growth.
Upside scenario:
- Accelerated reform implementation under Oman Vision 2040 would strengthen Oman’s outlook.

Tax and administration:
- Oman Tax Authority making steady progress on its Tax Administration Modernization Program.
Monetary and liquidity management:
- Central Bank of Oman (CBO) further refining its liquidity management framework.
Financial development:
- Financial development agenda proceeding with initiatives to expand access to finance.
SOE reforms and investment vehicles:
- SOE reforms advancing with tangible improvements in governance, profitability, and risk management.
- Future Fund Oman has launched operations, with numerous projects selected for funding and substantial capital mobilized from private sector investors.
Energy and diversification:
- Efforts to develop the renewable energy sector are underway, including work to foster green hydrogen investment and production.
- The 11th Five-Year Development Plan for 2026-2030 is being finalized with the overarching goal of accelerating economic diversification.

IMF staff thanked Omani authorities and other counterparts for open and productive discussions and warm hospitality.
Mission contact: Mr. César Serra led the IMF staff team during May 21-29, 2025.

Statement issued by IMF staff at the conclusion of the May 21-29, 2025 mission to Muscat, Oman.