World Bank upbeat on Oman’s financial recovery measures

Muscat: The World Financial institution has credited the Sultanate of Oman’s fiscal consolidation and public finance reform measures for quickly placing again on rails the home financial system after the turmoil unleashed by the worldwide downturn and the COVID-19 pandemic.

The Washington DC-based worldwide monetary establishment famous particularly the contribution made by the Medium Time period Fiscal Plan (MTFP) – the centrepiece of the federal government’s fiscal reform programme – for strengthening Oman’s total financial place and progress outlook.

“We help the authorities’ reform efforts underneath the MTFP, with the target of transitioning the financial system in direction of stronger and extra sustainable progress,” stated Issam Abousleiman, Nation Director of the GCC Nations, Center East and North Africa at The World Financial institution.

“The MTFP not solely goals to realize fiscal sustainability and macroeconomic stability however focuses on different key reform areas akin to supporting financial progress and constructing a complete social security web. These reforms ought to strengthen the tempo of financial progress by bettering the enterprise surroundings, creating a versatile and agile labour market, and attracting home and overseas investments.”

In an unique interview with Occasions of Oman, Abousleiman underlined the persevering with function of the hydrocarbon and non-hydrocarbon sectors because the “driving pressure” of the financial system.

The hydrocarbon sector, he stated, is projected to develop by over 8 % in 2022 and stay sturdy throughout 2023-24.

The non-oil financial system is anticipated to proceed its restoration trajectory and develop by 3 % yearly throughout the interval 2022-24, supported by stronger exports and logistics sectors, elevated industrial capability from renewable power and resurgence in tourism.

“Excessive oil costs forecast, accompanied with steadfast implementation of the MTFP would materially enhance the outlook and help advancing local weather change agenda, digitalisation and spur a powerful, inclusive and inexperienced restoration,” he famous.

Importantly, the windfall from increased hydrocarbon costs, supported by fiscal adjustment measures, has considerably improved fiscal and exterior balances, the World Financial institution official stated. Each balances become surplus in 2022 (5.7 and 6.4 % of GDP, respectively) and are anticipated to proceed in surplus within the medium time period resulting in a pointy fall within the debt-to-GDP ratio, he additional identified.

Commenting on the slew of upgrades introduced just lately by varied worldwide ranking businesses, Abousleiman stated they replicate vital enhancements in Oman’s fiscal metrics, a lessening of exterior financing pressures and ongoing efforts to reform public funds, and a pointy fall in authorities debt-to-GDP ratio.

“This bodes nicely for the Sultanate’s borrowing capability, and the federal government certainly raised US $4 billion in debt from regional and worldwide lenders final April for use for common sovereign financing and refinancing, in response to information compiled by Bloomberg,” he stated.

As talked about earlier, the financial system is projected to proceed its restoration and strengthen over the medium-term pushed by sturdy power costs, enlargement of oil and gasoline manufacturing, and wide-ranging structural reforms.

Accordingly, progress will likely be pushed by each hydrocarbon and non-hydrocarbon sectors, that are anticipated to develop by over 5 % and three % over 2022-24, respectively.

Increasing non-oil income have bolstered financial progress supported by the federal government’s structural reforms, new taxes, and diversification initiatives as per the brand new five-year plan (2021-25), underneath the Imaginative and prescient 2040 technique.  

As well as, the reforms geared toward growing the share of the non-public sector within the financial system could have one other constructive spillover for the non-oil financial system.