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Middle East and Central Asia > Oman

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Cover Selected Issues Papers
Monetary Policy Transmission in Oman
Thomas Kroen
Amid a pegged exchange rate to the US dollar and an open capital account, Oman’s policy rates move closely with US monetary policy. In this analysis, we show empirically that transmission from policy rates into effective lending and deposit rates remains subdued in Oman, even compared to GCC peers that similarly face a high oil price environment with persistent excess liquidity in the banking system. A cap on personal loan rates and low exposure of banks to SMEs and riskier borrowers limit passthrough into effective lending rates and credit conditions. The note documents ongoing actions by Omani policymakers to strengthen transmission and provides further recommendations on liquidity management, reserve management, and relaxing the interest rate cap.
Keywords:
monetary policy transmission; Oman's policy rates move; Fed policy rate hike; transmission from policy; credit growth; Deposit rates; Credit; Central bank policy rate; Excess liquidity; Interest rate ceilings
Cover Selected Issues Papers
Lifting productivity in Oman: The Role of Structural Reforms
Muayad Ismail
and
Haytem Troug
Oman’s potential nonhydrocarbon real GDP growth has trended downward since the global financial crisis, with a negative contribution from total factor productivity. This paper estimates productivity gains associated with structural reforms and identifies key binding constraints and reform priorities to boost productivity in Oman. Our results show that reforms to reduce the state’s footprint and strengthen institutions, as well as product market reforms, should be prioritized and packaged together to magnify productivity gains from labor market and financial sector reforms. These findings could inform the planning and implementation of the ongoing structural reform agenda envisaged under Oman Vision 2040.
Keywords:
Economic diversification; productivity; Oman; structural reforms; productivity gain; Lifting productivity; hydrocarbon real GDP growth; reform priority; product market reform; Commodity markets; Labor markets; Total factor productivity; 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
طنة عُمان: سلطنة عُمان مشاورات المادة الرابعة لعام 2023
International Monetary Fund. Middle East and Central Asia Dept.
التضخم للمستمر. أما معدا لإصلاحا ة وزخميتاومه أسعار النفط المععافيا تدت يشهد النشاط الاقتصاد اق:يسلا ىلع ضئاوف قيقحت إلى يرلجاا سابحلاة وملعاا ةيالملا ةصدرأ تلوحت ،زلعجا نم تاونس عدبف .نخفضام لظف عم ايربنخفاضا كا العام عالقطا نيد ضنخفاة. ومة العايللمال ةيلاحترازا ةرادلإاأسعار الطاقة و عفاترا ةيفلخ نامُع ةيؤر" ذينفت يف اريبا كمدقت تاطللسا ترزحوأ .نوديلر لكبملا دالسدا يف ةيتثنائسلاا تاروفولا ماتخدسا تانوبوكررديهلا ىلع نامُع نةطلس تمادعا نم ه للحدب غي القيامبما ينم ثيركناك اله لالا يز نكول ،"2040 .ينوبدروكريهر اليغ وملنا آفاق زيعزتو
Keywords:
سلطنة عُمان مشاورات المادة الرابعة لعام 2023 البيان الصحفي ، وتقرير خرباء الصندوق، ومرفق المعلومات
Cover IMF Staff Country Reports
سلطنة عمان - قضايا مختارة: إدارة الشرق الأوسط
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: 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 Staff Climate Notes
Energy Transition and Geoeconomic Fragmentation: Implications for Climate Scenario Design
Charlotte Gardes-Landolfini
,
Pierpaolo Grippa
,
William Oman
, and
Sha Yu
The transition to a low-carbon economy, which is needed to mitigate climate change and meet the Paris Agreement temperature goals, has been affected by the supply chain and energy supply disruptions that originated during the COVID-19 pandemic, the Russian invasion of Ukraine, and the subsequent energy crisis and exacerbation of geopolitical tensions. These developments, and the broader context of the ongoing “polycrisis,” can affect future decarbonization scenarios. This reflects three main factors: (1) pullbacks in climate mitigation policies and increased carbon lock-in in fossil fuel infrastructure and policymaking; (2) the decreasing likelihood of continuous cost reduction in renewable energy technologies; and (3) the likely intensification of macroeconomic shocks amid increasing geoeconomic fragmentation, and the associated policy responses. In this context, the note assesses the implications of the polycrisis for hypothetical scenarios used to assess climate-related financial risks. Following an analysis of the channels through which these effects are likely to materialize over short- and long-term horizons and some policy implications, the note proposes potential adjustments to the design of the climate scenarios used by financial institutions, central banks, and financial sector supervisors and regulators within their risk management frameworks.
Keywords:
Climate scenarios; polycrisis; climate risks; carbon lock-in; risk assessment; geoeconomic fragmentation; energy transition; energy security; disorderly transition; trade multilateralism; fossil fuel development; IMF staff climate note; IMF staff climate NOTE 2023/003; climate scenario; Renewable energy; Climate policy; Climate change; Non-renewable resources; Global; Central America; Caribbean
Cover Policy Papers
Resilience and Sustainability Trust – 2023 Contribution Agreements with Italy, Luxembourg, Oman, and the United Kingdom
International Monetary Fund. Finance Dept.
and
International Monetary Fund. Legal Dept.
This paper presents Resilience and Sustainability (RST) contribution agreements finalized with four contributors between April 2023 and September 15, 2023. The concluded agreements provide for contributions in a total amount of about SDR 4.7 billion across the three RST accounts – the loan account, deposit account, and reserve account. The new agreements with four members add critical resources that support the continued smooth operations of the RST.
Keywords:
Resilience and Sustainability Trust (RST); Contribution agreements; Resource adequacy; Funding; Contributions; transparency policy; contribution agreement; deposit account claim; SDR equivalent; reserve account contribution; Loans; SDR interest rate