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Middle East and Central Asia > Oman

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Cover IMF Staff Country Reports
Oman: 2024 Article IV Consultation-Press Release; and Staff Report
International Monetary Fund. Middle East and Central Asia Dept.
This 2024 Article IV Consultation highlights that supported by favorable hydrocarbon revenues and steadfast reform efforts, Oman’s economy continues to expand amidst low inflation. Fiscal and external surpluses continued in 2024 and are expected over the medium term. The banking sector remains sound. Profitability has recovered to pre-pandemic levels, capital and liquidity buffers are ample, while asset quality remains strong. Banks’ net foreign assets turned positive by end of 2023 for the first time since 2014. The authorities continue pursuing prudent fiscal management, amidst the successful rollout of the social protection law. The 2025 budget is set to preserve fiscal discipline, further lowering the nonhydrocarbon primary deficit, while maintaining spending on social safety nets broadly unchanged relative to 2024. The banking sector is sound, amidst continued efforts to strengthen regulatory and supervisory frameworks. Sustained implementation of reforms under Oman Vision 2040 will be key to achieving sustainable, job rich, and private sector-led nonhydrocarbon growth. The new social protection law has been successfully rolled out. Labor market reforms are ongoing, supported by the new labor law.
Keywords:
FSAP update mission; ROSC reassessment mission; FSAP mission; data ROSC; debt management strategy; FSAP participation; Oil prices; Anti-money laundering and combating the financing of terrorism (AML/CFT); Global
Cover Selected Issues Papers
Mitigating Fiscal Risks in Oman
Abdullah Alhassan
and
Dalia Aita
Fiscal risks are multifaceted in Oman and their potential impact on the fiscal position could be significant. Identification, monitoring, transparent reporting, and effective risk management of fiscal risks are a key component of a sound medium-term fiscal framework and paramount in underpinning fiscal credibility and the sustainability of public finances. This note revisits the exposure of Oman’s fiscal position to an array of potential risks, zooming in on the impact of oil price volatility and potential risks stemming from state-owned enterprises. It documents actions taken by Omani policymakers to mitigate the impact of fiscal risks and provides further recommendations on fiscal risk disclosure and management.
Keywords:
Oman; Fiscal Risks; Oil Price; Transparency; oil price volatility; copyright page; impact of fiscal risk; SOEs performance; SOEs debt; budget preparation process; downside oil price scenario; SOEs governance; Oil prices; Public enterprises; Global
Cover IMF Staff Country Reports
Oman: Selected Issues
International Monetary Fund. Middle East and Central Asia Dept.
This Selected Issues paper revisits the exposure of Oman’s fiscal position to an array of potential risks, zooming in on the impact of oil price volatility and potential risks stemming from state-owned enterprises. It documents actions taken by Omani policymakers to mitigate the impact of fiscal risks and provides further recommendations on fiscal risk disclosure and management. Better understanding of fiscal risks, combined with their transparent reporting and effective risk management underpin fiscal credibility and the sustainability of public finances. The annual budget can disclose guarantees, related beneficiaries, the expected duration, and the intended purpose. It is essential to identify and disclose the main fiscal risks from climate-related events and Oman’s climate agenda, both in qualitative and quantitative terms. Effective fiscal policymaking and fiscal risk management require appropriate coordination of decision making between central government and other parts of the public sector.
Keywords:
government bond bond market; government bond market in Oman; productivity gain; Passthrough regression; Fed policy rate hike; banking sector overview; banking sector concentration; Fiscal risks; Securities markets; Financial sector development; Capital markets; Productivity; Global
Cover IMF Staff Country Reports
Oman: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Oman
International Monetary Fund. Middle East and Central Asia Dept.
The 2023 Article IV Consultation discusses that Oman’s economic recovery continues while inflation remains contained which is supported by favorable oil prices and sustained reform momentum. The banking sector remains resilient. Profitability has recovered to prepandemic levels, capital and liquidity ratios are well above regulatory requirements, and nonperforming loans remain low and sufficiently provisioned. Stress tests suggest that banks are resilient to credit and liquidity shocks. Risks to the economic outlook are balanced. Sustaining the reform momentum under Oman Vision 2040 will be key to building resilience and boosting prospects for more inclusive, diversified, and sustainable private sector-led non-hydrocarbon growth. This requires further efforts to improve institutional quality, reduce the state footprint, and enhance the business environment, which in turn would help amplify productivity gains from labor market and financial development reforms. It also calls for the steadfast implementation of the new social protection and labor laws, leveraging digitalization, and accelerating green investments and advancing policies to meet climate commitments.
Keywords:
Omani authorities; liability positions vis-à-vis nonresident; article IV consultation mission; SOE divestment drive; state footprint; arrangements in Oman; Government asset and liability management; Fiscal stance; Global
Cover IMF Staff Country Reports
Gulf Cooperation Council: Economic Prospects and Policy Challenges for the GCC Countries
International Monetary Fund. Middle East and Central Asia Dept.
This paper on the Gulf Cooperation Council (GCC) discusses economic prospects and policy priorities for the GCC countries. A comprehensive package of policies should be implemented to respond to near-term shocks and uncertainty and to firmly address medium- and long-term challenges. In the near term, fiscal policy should remain prudent, avoiding procyclical spending and using the windfall from higher oil prices to rebuild buffers. Targeted and temporary fiscal measures could be undertaken to respond to shocks, if they materialize. In the medium term, GCC countries should continue pursuing fiscal consolidation consistent with ensuring intergenerational equity and sustainability, supported by a credible rules-based medium-term fiscal framework. Continued financial sector reforms are needed to support growth and stability. Structural policies should continue focusing on diversifying the economies away from hydrocarbon. Reform efforts aimed at further enhancing product market regulations, labor markets, and governance will spur growth, as will efficient investments in digital and green initiatives to accelerate transformation and support energy transition. The industrial policy should be carefully calibrated and not substitute for structural reforms while minimizing related inefficiencies.
Keywords:
Gulf Cooperation Council; GCC Countries; OPEC; GCC country; centrality indices; policies in the GCC; GCC net; GCC's acceleration; financial market; Inflation; Oil prices; Climate finance; Financial statements; Global; Middle East
Cover IMF Staff Country Reports
Oman: Selected Issues
International Monetary Fund. Middle East and Central Asia Dept.
Selected Issues
Keywords:
Non-hydrocarbon growth; net financial assets; Non-hydrocarbon sector; hydrocarbon revenue; revenue projection; Fiscal governance; Fiscal stance; Oil prices; Global
Cover IMF Staff Country Reports
Oman: 2022 Article IV Consultation-Press Release; and Staff Report
International Monetary Fund. Middle East and Central Asia Dept.
This 2022 Article IV Consultation discusses Oman’s strong vaccination efforts have allowed for the relaxation of all social distancing restrictions, and the economic recovery is gaining traction. Uncertainties continue to cloud the outlook, with downside risks dominating in the short run. Reinforcing fiscal sustainability over the medium term, as envisaged under the Medium-Term Fiscal Plan, requires further revenue and expenditure measures. The exchange rate peg continues to serve Oman well. Efforts to strengthen the monetary transmission mechanism and establish the treasury single account should be carefully coordinated to maintain adequate banking system liquidity. Prudential rules should be restored to pre-pandemic levels as the impact of the pandemic declines. Close monitoring of banks’ asset quality remains essential. Steadfast implementation of reforms under Vision 2040 is needed to foster strong, job-rich, private sector-led growth. This would require enhancing labor market flexibility, improving the business environment, advancing state-owned-enterprises reforms, leveraging digitalization, and tackling climate challenges.
Keywords:
IMF staff calculation; banking system liquidity; article IV consultation mission; oil price outlook; liability positions vis-à-vis nonresident; liquidity management framework; Fiscal consolidation; Oil prices; Fiscal stance; Global; Middle East and Central Asia
Cover IMF Staff Country Reports
Oman: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Oman
International Monetary Fund. Middle East and Central Asia Dept.
Sultan Haitham ascended to the throne in January 2020 and has committed to implementing strong fiscal and structural reforms to address longstanding vulnerabilities. In addition to persistent fiscal deficits arising from incomplete adjustment to lower oil prices since 2015, Oman faced twin shocks from the COVID-19 pandemic and a collapse in oil prices in 2020 that amplified fiscal and external vulnerabilities. The authorities moved rapidly to contain the spread of COVID-19 infections and provided broad-based policy measures to limit its impact on the economy. In addition, frontloaded fiscal consolidation has been implemented in the 2021 budget as part of the authorities’ Medium-Term Fiscal Plan (MTFP) which aims to eliminate the fiscal deficit over the medium term. Banks have high capital buffers and liquidity, but credit risk is a concern going forward. Structural reforms have been accelerated under Oman Vision 2040 to boost non-oil private sector growth and facilitate job creation.
Keywords:
staff appraisal; Omani authorities; government financing; hydrocarbon revenue; liability positions vis-à-vis nonresident; Oil prices; Fiscal stance; Global; Middle East
Cover IMF Working Papers
Fiscal Adjustment in the Gulf Countries: Less Costly than Previously Thought
Mr. Armand P Fouejieu
,
Mr. Sergio L. Rodriguez
, and
Mr. Sohaib Shahid
This paper estimates fiscal multipliers for the Gulf Cooperation Council (GCC) countries. Using OLS panel fixed effects on a sample of six countries from 1990-2016, results indicate that GCC fiscal multipliers have declined in recent years which would make the on-going fiscal consolidation less costly than previously thought. Though both capital and current multipliers have declined in recent years, capital multipliers are larger than current multipliers, which implies that reducing (less productive) current spending will help limit the adverse impact of such measures on growth.
Keywords:
WP; government spending; GDP; multiplier; Fiscal Policy; Fiscal Multiplier; GCC; oil GDP; GCC country; spending multiplier; tourism expenditure; spending growth; Capital spending; Current spending; Fiscal multipliers; Fiscal consolidation; Global
Cover Policy Papers
Gulf Cooperation Council: How Can Growth-Friendlier Expenditure-Based Fiscal Adjustment be Achieved in the GCC?
International Monetary Fund
growth in expenditure, GCC governments have started to implement significant fiscal consolidation measures, but more needs to be done. Rapid population growth and booming oil revenues led to large increases in government spending in the GCC in the decade to 2014, which now stands high by international standards. This expenditure is dominated by compensation of employees and other current spending which are large in percent of GDP compared to Emerging Market (EM) countries and other oil exporters. This keeps overall spending above levels consistent with long-term fiscal sustainability and intergenerational equity. The international experience with large fiscal adjustments provides some key lessons for GCC countries. This experience suggests that growth outcomes improve when fiscal adjustments are sustained as part of credible multi-year fiscal plans, rely on expenditure more than revenue adjustment, and lead to improvements in expenditure composition (away from current outlays to more productive spending) and the structure of revenue (away from direct to indirect taxation). Successful fiscal adjustments also tend to be part of wider structural reforms that support growth.
Keywords:
PP; GCC country; government spending; GCC government; wage bill; expenditure adjustment; GCC experience; reform agenda; labor market; Oil prices; Fiscal consolidation; Capital spending; Current spending; Global; Middle East and Central Asia