Muscat – The International Monetary Fund (IMF) has praised Oman’s efforts in dealing with the COVID-19 crisis and reviving the economy after the pandemic.

IMF said that higher oil prices, fiscal consolidation measures and progress on structural reforms are supporting a post-pandemic economic recovery in the sultanate.

An IMF mission, led by Daniel Kanda, conducted discussions in Muscat for the 2022 Article IV Consultation for Oman from September 20 to October 4, 2022.

In a statement issued at the conclusion of the IMF mission to Oman, Kanda said the sultanate’s economic recovery is gaining traction, supported by revival in the hydrocarbon sector and relaxation of COVID-19 social restrictions.

“High oil prices, continued fiscal consolidation under the authorities’ Medium-Term Fiscal Plan, and determined implementation of structural reforms under Oman Vision 2040 are expected to generate fiscal and external surpluses and support higher growth over the medium term,” he said.

IMF now projects Oman’s economic growth at 4.3 per cent for 2022, supported by increased hydrocarbon production and continued recovery of non-oil economic activity.

“Omani authorities continue to press forward with a broad array of structural reforms under Oman Vision 2040, with the goal to achieve the strong, job-rich and sustainable private sector-led growth needed to offer opportunities to jobseekers and ensure higher living standards for future generations,” Kanda said.

“Oman’s key priorities include enhancing labour market flexibility, boosting female employment, improving the business environment, advancing state-owned enterprises reforms, leveraging digitalisation, and continuing the implementation of green initiatives,” he added.

IMF noted that elevated oil prices and fiscal consolidation under the authorities’ Medium-Term Fiscal Plan have improved Oman’s fiscal and external balances considerably.

“The overall central government fiscal balance improved by 12.8 percentage points of GDP to a deficit of 3.2 per cent in 2021, largely due to higher oil revenue, expenditure restraint, and the introduction of VAT. Fiscal and external surpluses are expected in 2022 and over the medium term,” Kanda said.

He noted that Oman government’s 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.

Commenting on inflation, Kanda said Oman’s consumer price inflation has been contained thus far, partly reflecting administered prices and caps on selected fuel prices.

“Rebounding economic activity and elevated global inflationary pressures are expected to push up average inflation to three per cent in 2022 given the relatively high dependence on imports. Direct spillovers on the Omani economy from the war in Ukraine have been limited.”

IMF, however, warned that the heightened global uncertainties, particularly from the war in Ukraine, continue to cloud the outlook, with downside risks dominating in the short run.