The International Monetary Fund (IMF) on Sunday expected the fiscal deficit of the general budget in the Sultanate of Oman to decrease during 2021 to 2.4 percent as a percentage of the gross domestic product, thanks to the implementation of the medium-term fiscal balance plan.
The Fund explained in a report that the financial deficit of the Omani budget rose sharply during the past year.
To reach 19.3 percent of the GDP, while it is expected to record a surplus during 2022.
The debt of the Omani central government increased to 81.2 percent of the gross domestic product, with financing needs covered through domestic and external borrowing and asset withdrawal, according to the report.
The fund expects government debt to decline sharply in the medium term.
Fiscal consolidation and higher oil prices will likely reduce the current account deficit to -6.2 percent in 2021, and then to -0.6 percent in 2026.
The Omani economy was hit by a double shock from the pandemic and the collapse in oil prices in 2020.
The GDP and non-oil GDP contracted by 2.8 percent and 3.9 percent, respectively.
The report estimated that the economy would recover during 2021, with the non-oil sector recording a growth of 1.5 percent thanks to the introduction of Corona vaccines and the recovery of external demand for goods.
The Sultanate’s oil production fell to 954,000 barrels per day during the first seven months of the year, compared to 974 million barrels per day in the comparable period.
The budgets of Gulf countries, including Oman, were affected by the sharp drop in oil prices in 2014.
This prompted it to adopt austerity plans that include financial reforms to diversify revenues and not rely on oil as the only source of income.
The repercussions of Corona came to add more financial pressures on the countries of the region.
This may speed up the adoption of new economic reforms, as Oman passed a value-added tax law in April 2021 to support public revenues.