IMF commends ‘strong momentum' of structural reforms in Oman
Muscat – International Monetary Fund (IMF) has commended Oman for its ongoing implementation of structural reforms and continued economic growth, despite a contraction in hydrocarbon output resulting from OPEC+ oil production cuts.
An IMF staff team, led by César Serra, visited Muscat from May 21 to 29 to review economic and financial developments, assess outlook and discuss the country's policy priorities.
'The momentum of structural reforms remains strong, supporting Oman's ability to navigate a challenging external environment and accelerate economic diversification,' Serra said in a statement released at the end of the IMF mission.
IMF noted that Oman's economy continues to expand, driven by sustained investment in logistics, manufacturing, renewable energy and tourism, while inflation remains low.
'Despite a contraction in hydrocarbon output due to ongoing OPEC+ oil production cuts, real GDP growth strengthened to 1.7% in 2024, up from 1.2% in 2023, supported by robust non-hydrocarbon activity, particularly in manufacturing and services,' Serra said.
According to IMF, Oman's economy is expected to expand at a faster pace over the medium term, with overall GDP growth projected at 2.4% in 2025 and 3.7% in 2026.
'This improved performance is expected to be driven by the gradual phasing out of OPEC+ production limits and continued strong non-hydrocarbon growth, underpinned by sustained investments in key sectors,' Serra said.
However, he added that lower oil prices are likely to weigh on Oman's fiscal and external positions. 'Following a fiscal surplus of 3.3% of GDP in 2024, the surplus is projected to narrow to an average of 0.5% of GDP during 2025–2026, before improving over the medium term. This recovery will be supported by resumption of oil production and continuation of fiscal reforms.'
IMF acknowledged further reductions in Oman's public debt, which declined to 35.5% of GDP in 2024, down from 37.5% in 2023, as the government continued to allocate part of its fiscal surplus towards debt repayment. State-owned enterprise (SOE) debt was also reduced to around 31% of GDP, supported by steady progress on the SOE reform agenda led by Oman Investment Authority.
'Structural reforms are progressing well,' Serra said. 'Oman Tax Authority is making steady progress with its Tax Administration Modernisation Programme, Central Bank of Oman is further refining its liquidity management framework and the financial sector reform agenda continues with several initiatives aimed at expanding access to finance.'
He noted that SOE reforms are yielding tangible improvements in governance, profitability and risk management.
Limited impact of global trade tensions
IMF expects the direct impact of global trade tensions on Oman to be limited. However, lower oil prices and the risk of slower growth among key trading partners may weigh on the economic outlook.
'Risks to the outlook are tilted to the downside. While the direct effects of global trade tensions are likely to be limited – given Oman's modest exports to the United States – indirect effects could be more pronounced. On the upside, accelerated reform implementation under Oman Vision 2040 would strengthen the country's outlook,' Serra said.
Commenting on the banking sector, he added, 'It remains sound, supported by strong asset quality, healthy capital and liquidity buffers, and sustained profitability. Banks maintain a positive net foreign asset position, while private sector credit growth remains strong, supported by an expanding deposit base.'
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Muscat – International Monetary Fund (IMF) has commended Oman for its ongoing implementation of structural reforms and continued economic growth, despite a contraction in hydrocarbon output resulting from OPEC+ oil production cuts. An IMF staff team, led by César Serra, visited Muscat from May 21 to 29 to review economic and financial developments, assess outlook and discuss the country's policy priorities. 'The momentum of structural reforms remains strong, supporting Oman's ability to navigate a challenging external environment and accelerate economic diversification,' Serra said in a statement released at the end of the IMF mission. IMF noted that Oman's economy continues to expand, driven by sustained investment in logistics, manufacturing, renewable energy and tourism, while inflation remains low. 'Despite a contraction in hydrocarbon output due to ongoing OPEC+ oil production cuts, real GDP growth strengthened to 1.7% in 2024, up from 1.2% in 2023, supported by robust non-hydrocarbon activity, particularly in manufacturing and services,' Serra said. According to IMF, Oman's economy is expected to expand at a faster pace over the medium term, with overall GDP growth projected at 2.4% in 2025 and 3.7% in 2026. 'This improved performance is expected to be driven by the gradual phasing out of OPEC+ production limits and continued strong non-hydrocarbon growth, underpinned by sustained investments in key sectors,' Serra said. However, he added that lower oil prices are likely to weigh on Oman's fiscal and external positions. 'Following a fiscal surplus of 3.3% of GDP in 2024, the surplus is projected to narrow to an average of 0.5% of GDP during 2025–2026, before improving over the medium term. This recovery will be supported by resumption of oil production and continuation of fiscal reforms.' IMF acknowledged further reductions in Oman's public debt, which declined to 35.5% of GDP in 2024, down from 37.5% in 2023, as the government continued to allocate part of its fiscal surplus towards debt repayment. State-owned enterprise (SOE) debt was also reduced to around 31% of GDP, supported by steady progress on the SOE reform agenda led by Oman Investment Authority. 'Structural reforms are progressing well,' Serra said. 'Oman Tax Authority is making steady progress with its Tax Administration Modernisation Programme, Central Bank of Oman is further refining its liquidity management framework and the financial sector reform agenda continues with several initiatives aimed at expanding access to finance.' He noted that SOE reforms are yielding tangible improvements in governance, profitability and risk management. Limited impact of global trade tensions IMF expects the direct impact of global trade tensions on Oman to be limited. However, lower oil prices and the risk of slower growth among key trading partners may weigh on the economic outlook. 'Risks to the outlook are tilted to the downside. While the direct effects of global trade tensions are likely to be limited – given Oman's modest exports to the United States – indirect effects could be more pronounced. On the upside, accelerated reform implementation under Oman Vision 2040 would strengthen the country's outlook,' Serra said. Commenting on the banking sector, he added, 'It remains sound, supported by strong asset quality, healthy capital and liquidity buffers, and sustained profitability. Banks maintain a positive net foreign asset position, while private sector credit growth remains strong, supported by an expanding deposit base.'
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