Oman has made notable progress in strengthening its infrastructure in recent years, yet further development remains essential. Authorities are acutely aware of this need, balancing expenditures and fiscal stability while advancing efforts to diversify the economy beyond oil, Arabian Gulf Business Insight reports.
Traditionally, Oman has been more reserved than its UAE neighbors in embracing large-scale, high-profile developments aimed at attracting affluent tourists and expatriates. However, in recent years, the sultanate has shifted gears, expanding Muscat International Airport, constructing a new road in Musandam’s rugged terrain, and advancing plans for a railway connection to the UAE, among other initiatives.
“The expansion of Muscat International Airport and the development of luxury resorts have boosted Oman’s accessibility and appeal to tourists,” the International Monetary Fund (IMF) noted in its latest economic assessment of the country.
Urban redevelopment, residential and hospitality enhancements, and industrial expansion are following suit. Key projects include Sultan Haitham City on Muscat’s outskirts, the Aida development featuring Trump-branded villas, and the ongoing growth of the Duqm special economic zone in eastern Oman.
Mansoor Ahmed, an expert in the region’s real estate and infrastructure sectors, highlights Oman’s focus on upgrading its transportation networks. “The country has been actively improving road infrastructure and airport facilities to support economic growth and diversification,” he says.
Expanding Air and Rail Networks
Muscat International Airport’s expansion has made Oman more accessible to visitors, and authorities plan to open up to six additional airports by the end of the decade.
Infrastructure projects are also extending to public transportation. In early January, Oman’s Minister of Housing and Urban Planning, Khalfan Al-Shueili, announced that plans for Muscat’s metro system were nearing completion, with an expected launch within the next decade.
Rail transport, however, has proven more complex. The country’s long-planned national freight and passenger rail network faced delays until a partnership with the UAE’s Etihad Rail led to the Hafeet Rail development. This project will link Oman’s Sohar Port to Al Ain in Abu Dhabi.
The Muscat metro project presents its own challenges. While the city has a relatively small population of under two million—compared to Dubai’s three million and Riyadh’s seven million—its vast metropolitan area spans approximately 3,800 square kilometers, significantly larger than Dubai’s 1,300 square kilometers or Riyadh’s 1,975 square kilometers. “Connecting such a widespread area with a relatively low population density will be costly and time-consuming,” Ahmed explains.
Balancing Growth with Fiscal Discipline
One of Oman’s biggest hurdles in expanding infrastructure is securing funding without jeopardizing the country’s improved fiscal position. Recent reforms have strengthened Oman’s financial standing, earning it an investment-grade rating.
For fiscal year 2025, Oman’s budget allocates OMR900 million ($2.34 billion) to development spending, covering essential infrastructure, housing, and employment projects. While this matches the 2024 budget, a KPMG analysis suggests it reflects a nearly 30% reduction from the OMR1.2 billion ultimately spent last year, based on early estimates.
Since 2023, Oman has also leveraged sovereign wealth to support infrastructure investments. The nation’s infrastructure investor, Rakiza, plays a key role in financing projects across energy, utilities, telecom, transport, logistics, and social sectors in both Oman and Saudi Arabia. Co-managed by Oman Infrastructure Investment Management (OIM) and UK-based Equitix, Rakiza operates as a private equity firm, attracting international investment, including from Saudi Arabia’s Public Investment Fund.
Additionally, in March 2024, the Oman Investment Authority launched the $5 billion Future Fund Oman to support large-scale, commercially viable projects within the country, though not exclusively in infrastructure.
Public-Private Partnerships: The Way Forward
Infrastructure development is central to Oman’s strategy to enhance its global appeal as a tourist destination, according to the IMF. The key to achieving this, the Fund emphasizes in its latest Article IV Consultation, lies in greater public-private partnerships (PPPs).
“Collaborative projects can foster innovative solutions for sustainable tourism development and enhance sector competitiveness,” the IMF states.
Ahmed echoes this sentiment, underscoring the importance of private sector involvement. “Oman’s financing strategy combines traditional government funding with innovative financial instruments and private investment, ensuring sustainable growth and economic diversification,” he says.
As Oman continues to invest in infrastructure, its ability to balance fiscal prudence with ambitious development will be critical in shaping the country’s economic future.
