Muscat - The International Monetary Fund (IMF) has submitted a report on the Article IV consultations of the Sultanate of Oman after the conclusion of the visit of its experts to the country.
IM expects the Sultante to achieve a fiscal surplus estimated at 5.3 percent and a decrease in public debt to 43.7 percent of the GDP for the current year
It praised the measures taken by the government to contain the Covid pandemic and for fiscal consolidation that helped improve the situation.
IMF said indicated that the continued rise in oil revenues, acceleration of the implementation of projects within Oman Vision 2040, and new investment projects will contribute to enhancing the financial performance of the Sultanate of Oman.
IMF said that oil prices, which are likely to remain relatively high, and planned investment, along with structural reforms, contribute to the growth of the non-oil sector.
The fund indicated that the gross domestic product at constant prices in 2021 witnessed a growth of about three percent, compared to a contraction of (-3.2) percent in 2020, and it is expected that the growth will reach about 4.3 percent during the current year.
It is also expected that the recovery of economic activity and the growth of global inflationary pressures will contribute to pushing the average inflation rate to three percent this year, and it will decrease in 2023 to 2.5 percent, despite the risks of expectations of an economic downturn in the short term as a result of the global geopolitical conditions and their impact on the global economy and oil prices, renewed spread of COVID-19 infections, and the rise in global inflation rates due to the rise in global prices for food and energy.
The report indicated that the measures to control public finances taken within the framework of the medium-term financial plan, in addition to the rise in oil prices, led to a significant improvement in the balance of public finances and the balance of payments.
IMF said a decline in the fiscal deficit as a percentage of GDP from (-9.9%) in 2020 to (-3.2%) in 2021, and it is expected to achieve a fiscal surplus estimated at (5.3%) during the current year, provided that the fiscal surplus rates will continue in the long term. average.
As the public debt decreased to 62.9 percent of GDP in 2021, it is expected to decrease further to reach 43.7 percent of GDP in the current year.
The current exchange rate regime is still appropriate, as the report indicated that the continued peg of the Omani riyal to the US dollar provides a reliable monetary basis and helped reduce and stabilize inflation rates.
The report indicated that strengthening the current coordination between fiscal and monetary policy, improving liquidity management, and deepening financial markets may enable the government to implement a more independent monetary policy in the future. to strengthen regulatory frameworks.
The accelerated reforms that were implemented within the framework of Vision 2040 are an essential step to maintain growth rates, and this requires continuous efforts to strengthen the social safety net in order to improve the flexibility of the labor market, in addition to the plans to reform state-owned companies and raise the level of skills of workers that enhance competition and stimulate the private sector.