The Omani Economy: Reforms And Challenges

The GCC countries have dually suffered from an economic downturn as a result of the pandemic and an oil price crash. While these have widened the budget deficits of most GCC states, different countries have had varying responses, with Oman implementing to

2020 was a year of major changes for Oman. In January 2020, Sultan Haitham bin Tariq Al Said succeeded Sultan Qaboos as the ruler of Oman. Just months later, Oman’s government took steps early to support the sultanate’s economic growth and contain the spread of the pandemic by closing nonessential businesses and introducing social distancing requirements and border restrictions.

Fiscal measures included interestfree emergency loans, waiving or reducing selected taxes and fees, giving the flexibility to pay taxes in installments, and establishing the Job Security Fund to support citizens who had lost their jobs. According to the IMF, the Central Bank of Oman also lowered interest rates and liquidity injections, deferred loan installment payments, and relaxed macro-prudential requirements on capital buffers and liquidity ratios. Furthermore, Sultan Haitham bin Tariq also announced $779.2 million worth of development projects.

A tough year

However, it was still a challenging year for Oman, with more policies needed to target sustainable long-term growth. In May 2020, Fitch Ratings affirmed Oman’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BB-’ with a negative outlook. The negative outlook reflected “risks to sustained enactment of fiscal consolidation plans given the challenging economic and social context.” Then, in October 2020, S&P Global Ratings downgraded Oman’s sovereign ratings for the second time that year to “B+” from “BB-” with a stable outlook.