Mutrah Souq, a traditional market in Muscat, Oman. Victor Besa / The National
Mutrah Souq, a traditional market in Muscat, Oman. Victor Besa / The National

IMF urges Oman to boost non-oil revenue for growth



Oman’s economy continues to expand, but the Gulf nation must advance its efforts to raise non-hydrocarbon revenue to ensure sustainable growth, the International Monetary Fund has said.

Economic growth in Oman expanded to 1.9 per cent on an annual basis in the first half of 2024, from 1.2 per cent last year, the Washington-based fund said on Monday at the end of an official staff mission to the country.

While growth is projected to remain at 1.2 per cent this year, slowed by extended oil production curbs by the Opec+ bloc, it is expected to rebound next year. The growth will be supported by higher hydrocarbon production and acceleration of non-hydrocarbon growth, the IMF said.

Raising non-hydrocarbon revenue remains a key priority, with a focus on implementing tax administration reforms and tax policy measures, said Cesar Serra, who led the IMF staff visit to Oman. Phasing out untargeted subsidies is essential to free up resources for growth-enhancing investments that support Oman’s diversification agenda, Mr Serra said.

However, the IMF noted that the economic outlook for Oman is uncertain and faces significant risks from factors such as “oil price volatility, risks of a global economic slowdown and intensifying geopolitical tensions”.

Oman's economic trajectory is closely tied to global oil dynamics, with Opec+ cuts and shifting demand forecasts influencing the country's hydrocarbon revenue and overall growth outlook. This month, eight Opec+ member countries agreed to extend voluntary production adjustments of 2.2 million barrels per day for a month until the end of December.

Last week, Opec revised down its forecast for oil demand growth this year based on data from China, India and other regions, while also lowering its estimate for 2025, marking the producer group’s fourth consecutive downwards adjustment.

Global oil demand growth forecast for 2024 has been reduced by 107,000 barrels per day, now projected to increase by 1.8 million bpd compared to the previous year, Opec said.

Oman’s non-hydrocarbon sector, which grew by 1.8 per cent last year, jumped 3.8 per cent during the January-June period on the back of expansions in construction, manufacturing and services, the IMF said. The sultanate’s inflation slowed to 0.6 per cent during January-September period this year from 0.9 per cent in 2023.

“Fiscal and current account balances remained in comfortable surpluses, while public-sector debt declined further in 2023. Oman's sovereign credit rating has been upgraded recently to investment grade, reflecting the marked improvement in its fundamentals,” Mr Serra said.

The IMF team visited Muscat from October 30 to November 13 to discuss economic and financial developments, the outlook and the country’s policy priorities.

The fund said initiatives to improve the business environment, attract large-scale investments, and empower small and medium-sized enterprises are under way, while state-owned enterprise reforms under Oman Investment Authority are advancing.

“Efforts are ongoing to scale up renewable energy production to reduce electricity generation costs and support the green-hydrogen economy prospects. The digital transformation agenda is progressing,” Mr Serra said.

Oman launched its sustainable finance framework this year as it looks to support the economy by reducing reliance on fossil fuels and attracting foreign investment.

Last month, Mahmood Al Aweini, Oman's Secretary General of the Ministry of Finance, said Muscat can become a leading player in sustainable and green financing in the Gulf, as the country continues to make reforms as part of its Vision 2040 agenda.

In January, Oman Investment Authority also launched a 2 billion Omani rial ($5.2 billion) fund to encourage investments in the private sector and in SMEs. Oman also launched a three-year fiscal stability programme in October 2022 to add momentum to its economic recovery from the pandemic-driven slowdown and support the development of the country’s financial sector.

Mr Serra said Omani banking sector remains sound and profitability has recovered to pre-pandemic levels with ample capital and liquidity buffers.

“Further developing financial markets, expanding institutional investor base, and leveraging digitalisation will enhance access to finance and support diversification efforts,” he said.

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Nayanthara: Beyond The Fairy Tale

Starring: Nayanthara, Vignesh Shivan, Radhika Sarathkumar, Nagarjuna Akkineni

Director: Amith Krishnan

Rating: 3.5/5

if you go

The flights

Direct flights from the UAE to the Nepalese capital, Kathmandu, are available with Air Arabia, (www.airarabia.com) Fly Dubai (www.flydubai.com) or Etihad (www.etihad.com) from Dh1,200 return including taxes. The trek described here started from Jomson, but there are many other start and end point variations depending on how you tailor your trek. To get to Jomson from Kathmandu you must first fly to the lake-side resort town of Pokhara with either Buddha Air (www.buddhaair.com) or Yeti Airlines (www.yetiairlines.com). Both charge around US$240 (Dh880) return. From Pokhara there are early morning flights to Jomson with Yeti Airlines or Simrik Airlines (www.simrikairlines.com) for around US$220 (Dh800) return. 

The trek

Restricted area permits (US$500 per person) are required for trekking in the Upper Mustang area. The challenging Meso Kanto pass between Tilcho Lake and Jomson should not be attempted by those without a lot of mountain experience and a good support team. An excellent trekking company with good knowledge of Upper Mustang, the Annaurpuna Circuit and Tilcho Lake area and who can help organise a version of the trek described here is the Nepal-UK run Snow Cat Travel (www.snowcattravel.com). Prices vary widely depending on accommodation types and the level of assistance required. 

How to increase your savings
  • Have a plan for your savings.
  • Decide on your emergency fund target and once that's achieved, assign your savings to another financial goal such as saving for a house or investing for retirement.
  • Decide on a financial goal that is important to you and put your savings to work for you.
  • It's important to have a purpose for your savings as it helps to keep you motivated to continue while also reducing the temptation to spend your savings. 

- Carol Glynn, founder of Conscious Finance Coaching

 

 

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Kanguva
Director: Siva
Stars: Suriya, Bobby Deol, Disha Patani, Yogi Babu, Redin Kingsley
Rating: 2/5
 
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
New Zealand 15 British & Irish Lions 15

New Zealand 15
Tries: Laumape, J Barrett
Conversions: B Barrett
Penalties: B Barrett

British & Irish Lions 15
Penalties: Farrell (4), Daly

Water waste

In the UAE’s arid climate, small shrubs, bushes and flower beds usually require about six litres of water per square metre, daily. That increases to 12 litres per square metre a day for small trees, and 300 litres for palm trees.

Horticulturists suggest the best time for watering is before 8am or after 6pm, when water won't be dried up by the sun.

A global report published by the Water Resources Institute in August, ranked the UAE 10th out of 164 nations where water supplies are most stretched.

The Emirates is the world’s third largest per capita water consumer after the US and Canada.

Updated: November 18, 2024, 8:12 PM