The International Monetary Fund (IMF) said yesterday that it expects Oman's economy to recover this year with a projected growth of 2.5 per cent, spurred by non-hydrocarbon GDP growth of 1.5 per cent.
"The economy is set to recover in 2021, with non-hydrocarbon GDP growth of 1.5 per cent as vaccine roll-out gradually restores domestic activity along with the recovery of external demand," the IMF said.
"Oil production is projected to increase after the current Opec+ agreement expires in April 2022."
Last year Oman was hit with the double impact of the COVID-19 pandemic and low oil prices. Fiscal deficit widened to 19.3 per cent of GDP in 2020 while central government debt rose to 81.2 per cent. The deficit is expected to decline to 2.4 per cent this year and become a surplus next year, said the fund, while total government debt is estimated to decrease to 70.7 per cent of GDP this year and to decline further until about 47 per cent of GDP in 2026.
However, the IMF warned that there exists "substantial uncertainties" arising from the pandemic.
"Covid-19 variants would prolong the impact of the pandemic. Tighter global financial conditions could worsen the fiscal and external positions. Public debt remains vulnerable to risks, particularly from oil market developments and shocks to GDP growth, the exchange rate, primary balance and interest rates."
The Times of Oman reported that the sultanate welcomed the IMF's report on its efforts to contain the impact of the pandemic on the economy and in particular, the Economic Stimulus Plan (ESP) and social protection initiatives. These include interest-free emergency loans, exemptions from some taxes and fees, the repayment of taxes in instalments, the establishment of a Job Security Fund and the implementation of Value Added Tax (VAT).
Muscat has reaffirmed its determination to implement the objectives of Vision 2040 which was formally approved last year by Sultan Haitham Bin Tariq after having been announced in 2018 under his predecessor and cousin, the late Sultan Qaboos Bin Said.