Knowledge Note

"The devastating impact of COVID-19 on Oman's economic activity indicates that the public finances will remain under increasing pressure over the forecast period reinforced by severely subdued global energy prices."

The economy is expected to contract very sharply in 2020 amid the weakness of oil prices and the disruptions from COVID-19. Fiscal and external deficits will remain under immense strain due to prolonged low oil and gas prices, elevating public and external debt. Key risks to the outlook are prolonged low oil prices, which will induce high external borrowing needs, and lack of impetus for private-sector job creation that does not depend on government spending.