An International Monetary Fund (IMF) staff team, led by César Serra, conducted the 2024 Article IV consultation in Muscat from October 30 to November 13. Following the mission, Mr. Serra released a statement regarding Oman's economic status and outlook.
"Supported by favorable hydrocarbon revenues and steadfast reform efforts, Oman’s economy continues to expand," stated Mr. Serra. He noted that economic growth was at 1.2 percent in 2023 and increased to 1.9 percent in the first half of 2024. This growth was affected by oil production cuts under OPEC+ agreements but was boosted by stronger nonhydrocarbon growth sectors such as construction, manufacturing, and services.
Inflation decreased to 0.6 percent during January-September 2024 from 0.9 percent in 2023. Fiscal and current account balances remained in surplus, with public sector debt declining further in 2023. Oman's sovereign credit rating has been upgraded to investment grade due to improved fundamentals.
"The economic outlook remains favorable," Mr. Serra added, projecting growth to stay at 1.2 percent this year due to continued OPEC+-related oil production curbs but expected to rebound starting in 2025 with higher hydrocarbon production and accelerated nonhydrocarbon growth.
Mr. Serra emphasized the importance of maintaining prudent fiscal management amidst strengthened social safety nets: "The nonhydrocarbon primary deficit as a share of nonhydrocarbon GDP is poised to remain unchanged in 2024 relative to its 2023 level."
Efforts are ongoing to raise nonhydrocarbon revenues through tax reforms and phasing out untargeted subsidies: "Advancing efforts...remain a priority to free up resources." Strengthening fiscal institutions will support fiscal discipline and enhance credibility.
The exchange rate peg is deemed an appropriate policy anchor for Oman, with monetary policy actions expected to effectively transmit throughout the economy under the Monetary Policy Enhancement Project.
Oman Vision 2040 reforms are progressing decisively: "Reform implementation...is progressing decisively." The new social protection law has been rolled out successfully, labor market reforms are ongoing, and initiatives are underway to improve the business environment.
The IMF staff expressed appreciation for the cooperation received from Omani authorities during their mission.