MUSCAT: The International Monetary Fund (IMF) has affirmed the Sultanate of Oman’s strong economic performance, citing resilience amidst global uncertainty, resilient non-hydrocarbon growth and sustained fiscal discipline. Concluding its 2025 Article IV mission, the IMF said Oman’s economy continues to expand, inflation remains low and both fiscal and external positions are solid, while public debt has fallen further.
An IMF staff team led by Abdullah al Hassan held consultations in Muscat between November 9 and 24. In its concluding statement, the Fund noted that growth in 2024 and the first half of 2025 was driven by manufacturing, logistics, construction, trade, agriculture and fisheries, offsetting a contraction in hydrocarbon output due to OPEC+ production limits. Inflation eased to 0.6 per cent in 2024 and stayed contained at 0.9 per cent during January–October 2025. Oman posted a fiscal surplus of 3.3 per cent of GDP in 2024, while the current account recorded a surplus of 3.2 per cent. Government debt declined to 36.1 per cent of GDP by September 2025.
Looking ahead, the IMF said the outlook remains favourable. Growth is expected to strengthen in 2025–26 as oil production cuts are unwound and non-hydrocarbon activity continues to expand. Inflation is projected to remain low, converging towards 2 per cent over the medium term. While the current account is expected to slip into deficit during 2025–27 due to lower oil prices, it is forecast to return to surplus as production recovers and non-hydrocarbon exports gain traction. The IMF, however, cautioned that heightened geopolitical tensions and global uncertainty pose downside risks.
The Fund welcomed the authorities’ commitment to fiscal prudence, highlighting a narrowing of the non-hydrocarbon primary deficit in 2025 due to spending restraint and improved revenue collection. It said continued modernisation of tax administration, the rollout of VAT e-invoicing and plans to introduce a personal income tax on high earners in 2028 will be critical for long-term sustainability. Further reforms, including subsidy rationalisation, stronger fiscal frameworks and improved sovereign asset and liability management, were also encouraged.
The IMF said Oman’s exchange rate peg remains appropriate and effective in anchoring inflation. Ongoing monetary reforms and improvements in cash management are expected to strengthen policy transmission. The banking sector was described as strong and well capitalised, with ample liquidity and stable profitability, while deeper capital markets and enhanced supervision were identified as priorities.
Progress under Oman Vision 2040 was also acknowledged, with the IMF highlighting labour market reforms, business environment improvements, renewables, digital transformation and AI readiness as key to accelerating diversification and private-sector job creation.