Oman’s economic recovery is gaining traction: IMF

The Sultanate of Oman’s overall GDP growth is projected at 4.3 per cent in 2022, supported by increased hydrocarbon production and continued recovery of non-hydrocarbon economic activity, according to the International Monetary Fund (IMF).

The Washington DC headquartered institution made the observation following the recent conclusion of Article IV consultations with Oman.

“Strong vaccination efforts have allowed for the relaxation of all social distancing restrictions, and the economic recovery is gaining traction,” the Fund said in its assessment. “Rebounding economic activity and elevated global inflationary pressures are expected to push up average inflation to 3 per cent in 2022,” it further noted.

High oil prices and fiscal consolidation under the government’s Medium-Term Fiscal Plan (MTFP), have improved fiscal and external balances considerably, according to the report.

The government’s overall balance improved by 12.8 percentage points of GDP to a deficit of 3.2 per cent in 2021, largely due to higher hydrocarbon revenue, expenditure restraint, and the introduction of VAT. Fiscal and external surpluses are expected in 2022 and over the medium term. Central government debt declined to 62.9 per cent of GDP in 2021 and it is expected to decline to about 44 per cent of GDP in 2022, the Fund stated.

“The banking system has weathered the recent shocks relatively well. Financial soundness indicators appear healthy, benefiting from prudent oversight of the Central Bank of Oman and the strong buffers before entering the crisis. However, private sector credit growth has remained subdued,” the report pointed out.

Summing up, the IMF said: “The economic recovery is gaining traction,” the. Strong measures helped mitigate the health and socioeconomic impacts of the pandemic. Non-hydrocarbon growth is expected to strengthen over the medium term, supported by the oil price outlook, planned investments, and structural reforms. Fiscal and external buffers have increased, supported by increased hydrocarbon revenues and substantial fiscal consolidation.”