MUSCAT: The International Monetary Fund (IMF) has lauded Oman’s economic progress, bolstered by strong hydrocarbon revenues and steadfast reform efforts.

The upbeat assessment came in a report on Thursday by the IMF Executive Board endorsing a staff appraisal of its 2024 Article IV Consultation with Omani authorities. That appraisal underscored the Sultanate's steady economic growth, low inflation, and prudent fiscal management.

According to the IMF, Oman’s economy grew by 1.2 per cent in 2023 and accelerated to 1.9 per cent in the first half of 2024. While oil production cuts under OPEC+ agreements limited hydrocarbon contributions, non-hydrocarbon sectors, including construction, manufacturing, and services, recorded significant growth, reaching 3.8 per cent in the same period. Non-hydrocarbon activities to be the primary drivers of medium-term economic growth as private sector investments materialize.

Significantly, inflation continues to remain low, averaging 0.6 per cent from January to October 2024, down from 1.0 per cent in 2023, attributable to reduced transport and food prices. Fiscal and external surpluses continued, with the fiscal balance at 6.2 per cent of GDP and the current account balance at 2.4 per cent of GDP in 2024. Government debt has plummeted to 35 per cent of GDP, reflecting Oman’s commitment to fiscal responsibility.

But the IMF report has cautioned against potential downside risks, including geopolitical tensions, a global economic slowdown, particularly in China, and lower oil prices amid a potential oversupplied energy market in 2025. However, such as higher oil prices, faster global growth, and successful reforms under Oman Vision 2040, could further bolster the economy, it noted.

Expressing confidence in the Omani economy, the IMF Executive Board stated: “Supported by favourable hydrocarbon revenues and steadfast reform efforts, Oman’s economic outlook remains favourable. Non-hydrocarbon growth is set to accelerate over the medium term supported by the execution of sizable committed private sector investments and higher demand from neighbouring countries. Fiscal and current account balances are expected to remain in surplus over the medium term, albeit somewhat lower than their current levels, weighed down by softening oil prices, but supported by rising hydrocarbon production and continued fiscal discipline. The outlook is, nonetheless, subject to elevated uncertainty, including from oil price volatility, risks of a global economic slowdown, and intensifying geopolitical tensions.”

The report also applauded initiatives to support foreign investment inflows and economic diversification. It cited in this regard measures to elevate the Muscat Stock Exchange to emerging market status, enhancing non-bank financial institutions and deepen capital markets – moves that will bolster economic resilience, it said.

Referencing the recent 2025 State General Budget, the IMF welcomed the government’s commitment to preserving fiscal discipline. “Accelerating the momentum of fiscal reforms will be key to entrench fiscal sustainability and ensure intergenerational equity, while creating additional space to pursue growth-enhancing investments to achieve Oman Vision 2024 objectives.”

It stressed, however, the importance of staying focused on achieving the following goals: Tax administration reform; Implementation of the personal income tax law; Implementation of Pillar II of the global minimum tax; Sustaining reforms to reduce the cost of power supply to ensure cost recovery by 2030; and Lifting the fuel price cap. The latter measures are key to minimizing untargeted subsidies and freeing up resources for priority spending, it added.

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