Press Release No. 25/393

Washington, DC: An International Monetary Fund (IMF) staff team, led by Mr. Abdullah AlHassan, conducted the 2025 Article IV consultation discussions in Muscat during November 9–24, 2025. At the conclusion of the mission, Mr. AlHassan issued the following statement:

“Economic growth remained strong in 2024 and the first half of 2025, supported by expansions in manufacturing, wholesale and retail, logistics, construction, and agriculture and fishing, while hydrocarbon GDP contracted due to OPEC+ production curbs. Inflation eased to 0.6 percent in 2024 and remained contained at 0.9 percent during January-October 2025. The fiscal balance posted a surplus of 3.3 percent of GDP in 2024, while the current account also recorded a surplus of 3.2 percent of GDP. Government debt stood at 36.1 percent of GDP by September 2025.”

“The economic outlook remains favorable. Growth is projected to strengthen over 2025–26 as oil production cuts unwind and nonhydrocarbon activity continues to expand. Inflation is expected to stay low and converge toward 2 percent over the medium term. Fiscal and external positions are anticipated to remain solid, with fiscal surpluses projected to persist. The current account is projected to shift into deficit in 2025–27, driven mainly by lower oil prices, before gradually returning to surplus as oil production recovers toward potential capacity and nonhydrocarbon exports strengthen. However, heightened global uncertainty and renewed geopolitical tensions could weigh on growth and fiscal and external positions.”

“The authorities remain committed to fiscal prudence. The nonhydrocarbon primary deficit is estimated to have narrowed by 2 percent of nonhydrocarbon GDP in 2025, supported by expenditure restraint and improved nonhydrocarbon revenue collection. Continued progress on tax administration modernization, rolling out VAT e-invoicing, and introducing a personal income tax on high-income earners in 2028 will be central to reinforcing fiscal sustainability. Further fiscal reforms—including rationalizing non-essential current spending, phasing out untargeted energy subsidies, while protecting the most vulnerable, strengthening the medium-term fiscal framework, and developing a sovereign asset–liability management framework—will be essential to entrench fiscal sustainability and enhance policy credibility.”

“The exchange rate peg remains appropriate and continues to anchor low and stable inflation. The steadfast implementation of the Monetary Policy Enhancement Project—including introducing an Omani Rial standing deposit facility and operationalizing the interest rate corridor—, and gradually transitioning to a full-fledged treasury single account will strengthen monetary policy transmission.”

“The banking sector remains strong and sound, with ample capital and liquidity buffers and stable profitability. Continued efforts to strengthen the macroprudential framework, enhance granularity of regulatory data and supervisory capacity, improve the financial safety net and crisis management, and deepen capital markets to diversify financing sources for the private sector will be essential to safeguarding financial stability and fostering financial sector development.”

“Reform implementation under Oman Vision 2040 continues to advance. The 11^th Development Plan presents an important opportunity to accelerate economic diversification, boost productivity, and create more private-sector jobs for Omanis. Priorities include advancing labor market reforms, improving the business environment, strengthening market competition to increase private sector participation in the economy, enhancing SME support, deepening trade integration, pursuing renewables initiatives, and scaling up the digital transformation—including AI readiness.”

“The IMF team expresses its appreciation to the Omani authorities and all counterparts for their excellent cooperation, constructive discussions, and warm hospitality throughout the mission.”