Oman’s non-hydrocarbon economy is expected to grow by four per cent if the Sultanate continues with efforts to diversify the economy.
Monday 08, July 2019 BY KUDAKWASHE MUZORIWA
The International Monetary Fund (IMF) has lauded Oman’s efforts to strengthen its fiscal position, enhance private sector-led growth and employment as well as the diversification of the economy since the 2014 oil price shock.
In a report, the IMF stated that preliminary budget execution data indicates an improvement in the Sultanate’s overall fiscal balance last year, with the fiscal deficit estimated to have declined to about nine per cent of GDP from 13.9 per cent of GDP in 2017.
Oman economic activity started to recover last year, and the overall fiscal and current account deficits improved as well, reflecting mainly higher oil prices.
IMF said that Oman’s external buffers have remained broadly stable and the increase in central bank reserves is helping to offset a decrease in the value of external assets in the Sultanate’s wealth fund.
The IMF also encouraged the authorities to speed up the introduction of value-added tax (VAT) and measures to adjust government expenditure.
Additionally, the IMF is also calling on the government to introduce and implement a medium-term fiscal adjustment plan, based on reforms to tackle current spending rigidities, streamline public investment and raise nonhydrocarbon revenue, while prioritising measures that limit the impact on growth and place more of the adjustment on those who can best shoulder it.
“A formal medium-term fiscal framework will help anchor fiscal consolidation and limit implementation risks,” said IMF.