Oman’s economy continue on recovery path: IMF

Muscat:  The International Monetary Fund (IMF) has said that the Omani economy will continue making headways on the recovery path, after achieving a growth rate of 4.3% in 2022, driven mainly by a rise in oil prices and the growth of oil and non-oil activities.

This was unveiled in a statement marking the conclusion of IMF experts’ mission in the Sultanate of Oman. The IMF visit was in pursuance of an annual programme of periodic consultations, based on Article IV of the IMF’s Articles of Agreement.

The Fund’s mission experts praised the positive outcome of the economic and financial performance of the Sultanate of Oman, notably the intactness of the banking sector, and the progress made in the external account and efforts made to contain inflation.

Experts highlighted the acceleration in the pace of growth of non-oil activities in Oman from 1.2% in 2022 to 2.7% in the first half of 2023, thanks to the recovery of agricultural, forestry, fishing and construction activity and improved performance of service activities.

IMF Experts affirmed that the Sultanate of Oman was able to contain inflation due to support from high oil prices and ongoing reform efforts. The annual inflation rate declined from 2.8% in 2022 to 1.2% during the period from January to September 2023, they said.

IMF estimates indicated that Oman’s current account will achieve a surplus of 3.1% and 3.4% from the total gross domestic product (GDP) in 2023 and 2024, respectively.

The experts pointed out that public debt in Oman experienced a marked decline in 2022. This, they observed, led to the augmentation of Oman’s credit rating. Oman’s public debt levels are expected to decline to reach 29.4% in 2028, said the IMF experts.

They added that primary non-oil deficit of Oman will decline by 3.4% of total non-oil GDP in 2023, compared to 2022 figures.

IMF experts stressed the significance of maintaining efforts of financial reform to consolidate the sustainability of public finances and ensure the realization of justice between generations. In particular, they laid emphasis on the Social Protection Fund’s support for target groups, the amelioration of quality of life for those segments of society and the consolidation of sustainability of the unified retirement fund.

Speaking about monetary stability, IMF experts reaffirmed that the espoused fixed exchange rate system in Oman constitutes appropriate and credible standards for the monetary policy in the Sultanate of Oman. They also expressed the confidence that a “Project to Enhance the Efficiency of Monetary Policy” developed by the Central Bank of Oman (CBO) would strengthen the set of cash policy tools.

They pointed out that the profitability of banks operating in the Sultanate of Oman has returned to the desired levels. Liquidity in Oman still garners volumes of capital that are much higher than what is imposed by regulatory procedures.

The IMF mission encouraged the government of Oman to continue its ongoing efforts to press ahead with the implementation of Oman Vision 2040. They also stressed the importance of the new labour law as a measure to increase the flexibility of the labour market and enhance women’s contribution to the workforce.

The experts pointed out the importance of maintaining efforts currently being made to provide a lucrative environment for business practice, besides implementing the climate change adaptation plan by encouraging investment in renewable energy sources and hydrogen projects, guided by provisions of the national plan for zero emissions, as envisaged by the government.   -ONA