Muscat – Since His Majesty Sultan Haitham bin Tarik’s ascension to the throne, Oman’s economy has experienced notable growth, underpinned by ongoing efforts to diversify sources of income, enhance non-oil revenues, and stimulate private sector participation.

These reforms have translated into significant improvements in the country’s economic performance, with the government working steadfastly to reduce the fiscal deficit, promote sustainable financial stability, and boost overall productivity.

In pursuit of these goals, the government launched a medium-term financial plan (2020-2024), which focused on rationalising spending, broadening government revenue sources, and strengthening social protection mechanisms.

The success of these initiatives has laid strong foundations for achieving long-term fiscal sustainability. A crucial part of this effort is the National Programme for Financial Sustainability and Financial Sector Development (2023-2025), which aims to develop a vibrant and innovative financial sector, providing diversified financing solutions for sustainable economic growth.

The private sector has emerged as a key driver of the nation’s economic progress, particularly in the diversification of non-oil sectors. Initiatives like the Nazdaher Programme (National Programme for Private Sector Development and Foreign Trade) have been pivotal in unlocking opportunities for private companies, fostering innovation, and creating new avenues for investment.

A number of significant strategic projects, such as the Duqm Refinery Project and the Fish Canning and Value-Added Complex in Duqm, alongside renewable energy ventures, have contributed to the country’s economic transformation. These projects have not only attracted domestic and foreign investments but have also strengthened Oman’s position as a global investment destination.

On the fiscal front, Oman has made commendable progress in reducing public debt. By the end of 2024, the country’s public debt was estimated to stand at approximately RO14.4bn (34% of GDP), a significant decrease from RO19.8bn (68% of GDP) in 2020. This decline is the result of rigorous fiscal measures, including enhanced efficiency in public spending and an increase in non-oil revenues, compounded by higher oil prices.

The sultanate’s credit ratings have improved notably over the past few years, reflecting positive economic developments. Standard & Poor’s upgraded Oman’s rating from B+ in 2020 to BBB- in 2024, while Fitch moved its rating from BB- to BB+ with a positive outlook.

Similarly, Moody’s raised Oman’s rating from Ba3 to Ba1, underscoring investor confidence in Oman’s economic management and growth trajectory.

Oman’s economy recorded a remarkable GDP growth of 38% in 2023, surpassing the expected target. The real GDP at current prices reached approximately RO40.7bn, driven by a 27.8% growth in the oil sector and 6.2% growth in non-oil activities. This was complemented by an increase in the average price of Omani crude oil, which surged to US$80.7 per barrel, a 75% increase from 2020 levels. This economic momentum is expected to continue, with real GDP growth projections of 2.7% for 2025. The country also experienced a steady rise in total investments, which grew by an average of 11.7% from 2021 to 2023, reaching RO10.9bn.

However, while the private sector’s share of total investments increased, it remains below the target set in the development plan.

Strengthening the private sector’s contribution to national investment remains a priority moving forward. Despite global inflationary pressures, Oman has maintained a relatively stable inflation rate, averaging 1.7% between 2021 and 2023, well below the plan’s target of 2.8%. Efforts to stabilise inflation have included government interventions such as fixing fuel prices and supporting essential food items.

Monetary indicators also show positive trends, with local liquidity growing by 7.7%, and total deposits in the banking sector rising by 8.1% till October 2024.

The Muscat Stock Exchange has also shown positive growth, with the index up by 5.4% from 2020 to 2024. Oman’s trade balance has seen a remarkable improvement, with a trade surplus of RO7.8bn in 2023, up from RO1.5bn in 2020. This improvement is attributed to strong oil export performance and a rebound in non-oil exports, which contributed to the overall growth of commodity exports.

Foreign direct investment (FDI) has also surged, with FDI inflows rising by 121% between 2020 and 2023, reaching RO4.8bn. The cumulative value of FDI by the end of 2023 stood at RO25.4bn, reflecting the country’s success in enhancing its investment climate.

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