IMF Expects Oman’s Fiscal Surplus to Rise to 4.5% of GDP in 2026 as Oil Supports Growth
The International Monetary Fund expects Oman’s fiscal surplus to widen significantly in 2026, supported by higher oil revenues, continued fiscal discipline, and resilient economic performance despite regional geopolitical pressures.
In a statement issued after an IMF staff visit to Muscat from 7 to 15 June 2026, the Fund projected that Oman’s fiscal surplus will rise to 4.5% of GDP in 2026, compared with 0.6% in 2025. The surplus is expected to remain strong at 4.2% of GDP in 2027.
The IMF also expects Oman’s current account balance to shift from a deficit of 1.9% of GDP in 2025 to a surplus of about 3% of GDP in both 2026 and 2027, supported by stronger hydrocarbon revenues and robust growth in non-hydrocarbon exports.
Stronger Growth Outlook for 2026
The Fund projects Oman’s real GDP growth at around 3.7% in 2026, compared with 2.4% in 2025 and 1.6% in 2024. Growth is expected to moderate to 3% in 2027.
The improved near-term outlook largely reflects higher oil production. According to the IMF, Oman’s oil and natural gas infrastructure has remained largely unaffected by regional disruptions, enabling the country to increase oil production and exports despite supply disruptions elsewhere in the region.
However, the non-hydrocarbon sector is expected to face temporary headwinds. The IMF projects non-hydrocarbon growth to ease to 2.5% in 2026, reflecting the impact of the regional conflict on tourism, construction, and related activities, before accelerating to 3.2% in 2027 as broader economic activity recovers.
Fiscal and External Balances Strengthen
Oman’s fiscal position has continued to improve, supported by prudent public finance management and stronger hydrocarbon revenues. The IMF highlighted that central government debt declined to 34.7% of GDP by the end of 2025, reinforcing the country’s improved fiscal resilience.
The expected expansion in the fiscal surplus gives Oman additional policy space, but the IMF emphasized the importance of maintaining reform momentum. Sustained fiscal discipline, stronger non-oil revenue mobilization, and efficient public spending remain central to reducing long-term exposure to oil price volatility.
The external position is also expected to strengthen. A return to a current account surplus of around 3% of GDP would mark a notable recovery from the 2025 deficit, reflecting stronger export revenues and an improved trade position.
Inflation Pressures Remain Manageable but Have Increased
Although average inflation remained contained at 1% in 2025, the IMF noted that inflation rose to 2.8% year-on-year during January to May 2026, mainly driven by higher food and transportation prices.
The increase remains moderate by regional and global standards, but it highlights the importance of monitoring imported inflation and supply chain pressures, particularly in a more uncertain geopolitical environment.
Banking Sector Resilience
The IMF also noted that Oman’s banking sector remains resilient, supported by comfortable capital and liquidity ratios, strong asset quality, profitability, and prudent oversight by the Central Bank of Oman.
This strengthens Oman’s macroeconomic position, as a well-capitalized and liquid banking system can help absorb external shocks and support credit conditions during periods of heightened uncertainty.
Key Risks and Policy Priorities
The IMF warned that risks to the near-term outlook remain tilted to the downside. A prolonged escalation of the conflict in the Middle East could lead to a deeper regional and global slowdown, weighing on tourism, non-hydrocarbon exports, foreign direct investment inflows, and Oman’s overall growth prospects.
At the same time, the IMF identified potential upside risks from a swift resolution of the conflict, higher sustained oil prices and production, increased transportation and logistics activity linked to regional integration, and faster reform implementation under Oman Vision 2040.
Looking ahead, the IMF encouraged Oman to continue advancing structural reforms aimed at strengthening fiscal and external sustainability, improving tax administration, enhancing medium-term fiscal frameworks, transitioning to active liquidity management, deepening the financial sector, improving the transparency of state-owned enterprises, increasing female labor force participation, and continuing renewable energy initiatives.
Overall Assessment
The IMF’s latest assessment points to a stronger near-term outlook for Oman, with oil production and revenues supporting growth, fiscal performance, and the external balance in 2026. However, the broader policy challenge remains unchanged: converting today’s improved fiscal position into durable, diversified growth.
For Oman, the key test will be whether higher oil-driven surpluses can be used to accelerate non-hydrocarbon development, strengthen fiscal buffers, and reduce the economy’s long-term sensitivity to energy market cycles.
Source: International Monetary Fund, “Staff Concludes Staff Visit to the Sultanate of Oman,” Press Release No. 26/206, 16 June 2026.
