Oman’s economic performance was strong in 2013 as the real non-hydrocarbon sector grew by 5.5% last year and will remain the same in 2014, the IMF said in a statement following a two-day workshop at the central bank of Oman.
The sultanate’s fiscal and external sectors have posted surpluses in 2013 at over 5.5% and around 10.0% of GDP, respectively, the IMF estimated.
Fiscal and external surpluses are expected as well in 2014, though of lower magnitude, according to the IMF.
The IMF has warned that Oman’s fiscal situation might deteriorate over the next three years. Oman’s state budget might slip into a 3.8% of GDP deficit by 2015, the IMF recently forecast.
The new state budget for 2014 implies a 5% y/y increase in spending to OMR 13.5bn and a 4.5% y/y growth in revenue to OMR 11.7bn. The 2014 state budget thus forecasts an OMR 1.8bn (USD 4.7bn) deficit, accounting for 6% of the projected GDP. The new budget assumes a conservative oil price of USD 85 per barrel.
The IMF underscored that Oman’s public investment program is expected to help maintain non-hydrocarbon growth around 5.0% over the medium term. The banking system also remains profitable and stable, the IMF noted. The sector had an average return on assets of 1.6% as of December 2013, return of equity at 11%, capital adequacy ratio of 16.2%, and gross non-performing loans of 2.1%, the IMF estimated.
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