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07-Jul-2019

IMF slashes Oman's 2019 economic growth forecast to 0.3%

The International Monetary Fund has cut Oman’s 2019 economic growth forecast to 0.3% from 1.1% as OPEC-led production curbs slash oil-related growth among Gulf energy producers. The forecast comes after Saudi Arabia - the world’s top crude exporter - said on 30 June. 1Q19 economic growth shrank by more than half on a quarterly basis. In lowering Oman’s expected real GDP growth rate to 0.3% from 1.1% the IMF said it expected its oil GDP to decrease by 1.1% against April’s estimate of a 0.6% contraction, the fund said in a statement late last week. A rebound in crude prices helped Oman’s overall gross domestic product grow 2.2% last year, but its debt rose and some fiscal reforms were delayed, the IMF said.
 
Its gross government debt rose to 53.5% of GDP last year, according to the fund. While Oman is not at immediate risk of a credit crunch, as it has sufficient reserves to cover debt repayments, it should work harder on fiscal adjustment reforms, said the IMF, which called for “an expeditious introduction of VAT and measures to adjust government expenditure.” The sultanate had originally planned to introduce a 5% value-added tax in 2018, which is now expected to start in 2020. To guide its deficit-cutting, the IMF said it welcomed Muscat’s plans to work with the World Bank on a public expenditure review that could help to make spending more efficient.