The International Monetary Fund (IMF) listed Oman’s efforts at diversifying its economy from hydrocarbons as a positive and said that its spending cuts would drive down deficits
“The government’s diversification efforts and the planned completion of major infrastructure projects are expected to gradually raise non-hydrocarbon growth to about 4 percent over the medium term,” said Stéphane Roudet, who led a team which visited Muscat to hold discussions with Oman.
“The government is undertaking further reforms to raise non-hydrocarbon revenue, such as introducing value-added and excise taxes, and intends to continue with spending restraint. This would bring the deficit to below 4 percent of GDP in the next two years,” Roudet added.
Countries in the Middle East have been hurt by an oversupplied oil market, which brought oil prices down to multi-year lows.
The fall in oil revenues that followed the price slump has hurt their economies and widened deficits, prompting many to reign in public spending and raise new taxes.
However, prices have picked up on the back of an agreement, between OPEC nations and countries like Russia, to cut oil output.
The lender also said that Oman’s government needed to ease regulations and encourage private sector growth.
“Structural reforms that promote private sector development, productivity and competitiveness gains, diversification, and job creation for nationals are paramount,” Roudet said in a statement.
The IMF also sees Oman’s deficit widening in the next five years as oil prices fall back, according to its assumptions.
