Oman asked the International Monetary Fund (IMF) to provide technical assistance to help the country develop a medium-term debt strategy and strengthen its fiscal framework.
The Gulf country has been hit hard by the dual shock of low oil prices and the coronavirus crisis last year to settle as one of the region's weakest economies, as the shocks took a heavy toll on the economy in 2020.
To address rising fiscal vulnerabilities, the authorities announced an ambitious medium-term fiscal adjustment plan and broad public-sector reforms. A modest recovery is anticipated for 2021, with further strengthening of growth over the medium term, but there is substantial uncertainty around the outlook.
Moreover, careful management of the sovereign-bank nexus over time would support banking system resilience.
The IMF pointed out that steadfast implementation of structural reforms is paramount to promote economic persification and job creation for Omanis, and support fiscal and external sustainability.
In this regard, areas for reform, in line with Oman Vision 2040, include restructuring public administration, strengthening governance of state-owned enterprises, improving the flexibility of labor markets, and strengthening corporate restructuring mechanisms.
In addition, a well designed social safety nets would also support the reallocation of labor toward expanding sectors as economic persification proceeds.
An International Monetary Fund (IMF) mission, led by Daniel Kanda, conducted a virtual mission to Oman from January 17 to 31 to review economic developments, the outlook, and policies. Discussions focused on the impact of COVID-19 and related oil price shock, and policy priorities during the recovery phase and beyond.
The Omani authorities indicated that they will be favorable to the publication of future IMF reports. The IMF staff team would like to thank the Omani authorities and other counterparts for the open and candid discussions.
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