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Oman’s economy to recover next year after 2023 slump

Sultan of Oman Haitham bin Tariq. The IMF praised the strength of Oman's banking sector Oman News Agency
Sultan of Oman Haitham bin Tariq. The IMF praised the strength of Oman's banking sector
  • Opec+ oil cuts bite
  • ‘High uncertainty’ says IMF
  • But fiscal plan strong

Oman’s economic growth will rebound in 2024 on higher oil production and robust non-oil growth, the International Monetary Fund (IMF) has said.

The Sultanate’s GDP growth is forecast to slow down this year to 1.3 percent from 4.3 percent in 2022 due to Opec+-related oil cuts.

The Washington-based institution has forecast Oman’s growth to recover to 2.7 percent in 2024.

“Fiscal and current account balances are projected to remain in surplus over the medium term albeit trending down along with oil prices,” IMF said in its end-of-mission statement released after visiting the Gulf state.

However, the sultanate’s outlook is subject to “high uncertainty”, including oil price volatility, global economic and financial developments, and potential indirect spillovers from the ongoing conflict in Gaza.

Oman launched a medium-term fiscal programme in 2020 to reduce public debt, diversify revenue sources, and drive economic growth.

“Institutionalising a medium-term fiscal framework, building on the significant progress made under the medium-term fiscal plan, will help cement fiscal discipline and credibility,” IMF said.

Sustaining the momentum of fiscal reforms will help entrench fiscal sustainability and ensure intergenerational equity, it stated, adding planned tax reforms and phasing out untargeted energy subsidies remain a priority.

The IMF said that the exchange rate peg with the US dollar remains a credible monetary anchor, and efforts are ongoing to improve the monetary policy framework.

“While the banking sector continues to show resilience, accelerating financial sector development is key to expand access to finance and support diversification efforts,” the report stated.