Mubasher: A delegation from the International Monetary Fund (IMF) recently tackled improving Oman’s financial environment by implementing regulatory processes and raising the level of workers’ skills to bolster private sector employment.
The IMF delegation, led by Allison Holland, visited Oman from 3 to 16 May to hold talks with Omani authorities, according to a statement by the IMF.
Omani authorities understand that “the sustained decline in oil prices underscores the need to undertake sustained fiscal adjustment, accelerate economic diversification, and increase the role of the private sector to stimulate the economy,” said Holland.
“The combination of lower oil prices and higher spending has resulted in a widening of the budget deficit to around 22% of GDP,” the statement said, noting that the Sultanate’s authorities have set “ambitious” fiscal targets for the 2017 budget, which will help in decreasing deficit almost half to 12% of gross domestic product (GDP) if successful.
“The timely implementation of the increase in corporate income tax and planned introduction of [the value-added tax (VAT)] and excise duties” will support the improvement in Oman’s fiscal position over the medium-term, the statement indicated.
Estimated at 17% of GDP in 2016, Oman’s current account deficit is expected to decline, the IMF added.
It is expected that economic growth will remain “flat” at 3% in 2017, after falling to 3% in 2016 from 4.2% in 2015 on the back of lower oil prices.
The agreement made by the Organization of Petroleum Exporting Countries (OPEC) to trim oil production “will fully offset the 2.5% growth in the non-hydrocarbon sector, which is expected to slow due to planned fiscal consolidation,” the IMF said.
The delegation said it was “encouraged” by the efforts undertaken by Omani authorities to achieve the goals of the 9th Development Plan into actions through the “Tanfeedh” implementation process.