Muscat – The economic outlook for Oman remains favourable, with real GDP growth expected to strengthen over 2025–26 as non-oil activities continue to expand and oil output begins to rise, according to the International Monetary Fund (IMF).
An IMF staff team led by Abdullah AlHassan conducted the 2025 Article IV consultation discussions in Muscat from November 9 to November 24, 2025. At the conclusion of the mission, the IMF said Oman has shown strong resilience amid heightened global uncertainty, renewed geopolitical tensions and oil price volatility in 2025.
“The economy continues to expand, supported by robust nonhydrocarbon activity and low inflation. Fiscal and external positions remain strong, and public debt has declined further,” the IMF said in its statement at the end of the mission.
According to the Fund, Oman’s economic performance remained solid in 2024 and in the first half of 2025, driven by expansions in manufacturing, wholesale and retail trade, logistics, construction, and agriculture and fisheries. However, hydrocarbon GDP contracted due to OPEC+ production curbs. Inflation eased to 0.6% in 2024 and stayed contained at 0.9% between January and October 2025.
The IMF reported that Oman’s fiscal balance posted a surplus of 3.3% of GDP in 2024, while the current account registered a surplus of 3.2% of GDP. Government debt had declined to 36.1% of GDP by September 2025.
Looking ahead, the IMF expects the outlook to remain positive. “Growth is projected to strengthen over 2025–26 as oil production cuts unwind and nonhydrocarbon activity continues to expand. Inflation is expected to stay low and converge towards 2% over the medium term,” AlHassan said in the statement.
He added that Oman’s fiscal and external positions are set to remain strong, with fiscal surpluses likely to continue. “The current account is projected to shift into deficit in 2025–27, driven mainly by lower oil prices, before gradually returning to surplus as oil production recovers towards potential capacity and nonhydrocarbon exports strengthen. However, heightened global uncertainty and renewed geopolitical tensions could weigh on growth and fiscal and external positions.”
AlHassan commended Oman’s commitment to fiscal prudence and effective debt management. The nonhydrocarbon primary deficit is estimated to have narrowed by 2% of nonhydrocarbon GDP in 2025, supported by spending restraint and stronger nonhydrocarbon revenue collection. He said ongoing efforts to modernise tax administration, roll out VAT e-invoicing, and introduce a personal income tax on high-income earners in 2028 would be central to reinforcing fiscal sustainability.
He added that further fiscal reforms – such as rationalising non-essential current expenditure, phasing out untargeted energy subsidies while protecting vulnerable households, strengthening the medium-term fiscal framework, and developing a sovereign asset–liability management framework – would be essential to entrenching fiscal sustainability and enhancing policy credibility.
The IMF also highlighted progress under Oman Vision 2040, noting advances in social protection, labour market flexibility, improvements to the business environment, SOE (state-owned enterprises) reforms, and initiatives in digitalisation and renewable energy.
“The 11th Five-Year Development Plan presents an important opportunity to accelerate economic diversification, boost productivity, and create more private-sector jobs for Omanis,” AlHassan said. Key priorities include deepening trade integration, enhancing SME support, strengthening market competition, and scaling up digital transformation – including AI readiness.
The IMF further noted that Oman’s banking sector remains strong and sound, with ample capital and liquidity buffers and stable profitability.
AlHassan said Oman’s continued efforts to strengthen the macroprudential framework, improve regulatory data and supervisory capacity, enhance the financial safety net and crisis-management mechanisms, and deepen capital markets would be vital to safeguarding financial stability and supporting financial-sector development.