Oman’s economy continues to expand, driven by low inflation, fiscal improvements, and ongoing reforms, according to the International Monetary Fund (IMF).
An IMF mission, led by César Serra, conducted the 2024 Article IV Consultation in Muscat from October 30 to November 13.
“Supported by favorable hydrocarbon revenues and sustained reform efforts, Oman’s economy is growing steadily,” Serra said. While GDP growth was 1.2% in 2023, it accelerated to 1.9% year-on-year in the first half of 2024. Despite oil production cuts under OPEC+ agreements, non-hydrocarbon sectors such as construction, manufacturing, and services saw significant growth, expanding by 3.8% during the same period. Inflation also eased to 0.6% from January to September 2024, down from 0.9% in 2023.
Positive Economic Outlook and Fiscal Surplus
The IMF projects Oman’s GDP growth at 1.2% for 2024, with a stronger rebound anticipated in 2025 as hydrocarbon production increases and non-hydrocarbon sectors continue to expand.
Oman’s fiscal and current account balances remain comfortably in surplus, supported by declining public sector debt and improved economic fundamentals. This fiscal strength recently earned Oman an upgrade to investment-grade status for its sovereign credit rating. However, the IMF cautioned that surpluses might decline slightly if oil prices soften further.
Serra highlighted the importance of maintaining progress on fiscal reforms to ensure long-term sustainability and intergenerational equity. Key priorities include enhancing non-hydrocarbon revenues through tax policy reforms, phasing out untargeted subsidies, and reallocating resources toward growth-oriented investments to support Oman’s economic diversification efforts.
Advancing Reforms Under Vision 2040
Reforms under Oman Vision 2040 are progressing steadily. Serra noted successful implementation of the new social protection law and ongoing labor market reforms. Efforts to improve the business environment, attract large-scale investments, empower SMEs, and advance state-owned enterprise (SOE) reforms under the Oman Investment Authority are also underway.
Oman is scaling up renewable energy production to reduce electricity costs and support the green hydrogen economy. Additionally, the country’s digital transformation agenda continues to make significant strides.
Stable Banking Sector and Financial Market Development
The IMF highlighted the stability of Oman’s banking sector, which has recovered to pre-pandemic profitability levels. Capital and liquidity buffers remain robust, and asset quality is strong. Further development of financial markets, expanding the institutional investor base, and leveraging digitalization will enhance access to finance and support economic diversification.
The IMF also reaffirmed that Oman’s exchange rate peg remains a credible and appropriate policy anchor. The implementation of the Monetary Policy Enhancement Project will further strengthen monetary policy transmission across the broader economy.
The IMF staff expressed appreciation to the Omani authorities for their cooperation and candid discussions during the consultation.
