The International Monetary Fund has cut Oman’s 2019 economic growth forecast to 0.3 per cent from 1.1 per cent 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 June 30 its first-quarter rate of economic growth shrank by more than half on a quarterly basis.
In lowering Oman’s expected real GDP growth rate to 0.3 per cent from 1.1 per cent the IMF said it expected its oil GDP to decrease by 1.1 per cent against April’s estimate of a 0.6 per cent contraction, the fund said in a statement late on Wednesday.
A rebound in crude prices helped Oman’s overall gross domestic product grow 2.2 per cent last year, but its debt rose and some fiscal reforms were delayed, the IMF said.
Oman’s state coffers have been hit hard by a slump in oil prices over the past few years. Its increased external borrowing has prompted concerns among investors and pushed its credit rating into junk status.
Its gross government debt rose to 53.5 per cent 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 per cent 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.