Oman:2022 Article IV Consultation-Press Release; and Staff Report

Strong policy actions helped mitigate the fallout from the COVID-19 pandemic, and the economic recovery is gaining traction, supported by revival in the hydrocarbon sector and the relaxation of social restrictions. CPI inflation has been contained thus far, partly reflecting administered prices and caps on selected fuel prices. Fiscal and external buffers have increased, supported by higher hydrocarbon revenues and substantial fiscal adjustment under the authorities’ Medium-Term Fiscal Plan (MTFP). The authorities remain committed to fiscal consolidation notwithstanding oil revenue windfalls and social pressures. Financial soundness indicators appear healthy, benefiting from the strong buffers before entering the crisis and prudent central bank oversight. A broad range of structural reforms are being implemented under Oman Vision 2040. However, downside risks, notably from global sources, dominate in the short run.