The International Monetary Fund (IMF) has lauded the efforts taken by authorities in Oman to realign finances while predicting that rise in oil prices, and ongoing reforms could help the sultanate in reducing deficit.
“Ongoing reforms and the recovery in oil prices would help reduce fiscal and external deficits significantly over the next couple of years,” said a report prepared by IMF’s executive board after concluding Article IV consultation with the sultanate.
The report said due to the lower oil price environment, Oman has posted double-digit fiscal and current account deficits over the past few years, leading to large increases in government and external debt and a decline in external buffers.
In the report, IMF directors welcomed Oman’s efforts to bolster the fiscal position and encouraged implementation of structural reforms to boost private sector led growth, increase economic diversification, create jobs and foster inclusive growth.
The report however indicated that there is a need for additional reforms for the rapid reductions in the fiscal deficit and debt. It suggested measures to tackle current spending rigidities, streamlining capital outlays and enhancing efficiency. It also stressed on the need of further increasing non-hydrocarbon revenue. “In this context, directors recommended the introduction of a formal medium term fiscal framework and improvements to budget planning and expenditure controls,” said the report.
“Directors underlined the need for structural reforms to promote private sector development and productivity to enhance competitiveness, diversification, and job creation for nationals,” the report added.
Source Credit: Muscat Daily