2016 Index of Economic Freedom

Oman

overall score67.1
world rank52
Rule of Law

Property Rights55.0

Freedom From Corruption45.0

Limited Government

Government Spending36.8

Fiscal Freedom98.5

Regulatory Efficiency

Business Freedom70.1

Labor Freedom72.5

Monetary Freedom77.9

Open Markets

Trade Freedom85.0

Investment Freedom70.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 4.1 million
  • GDP (PPP):
    • $162.4 billion
    • 2.9% growth
    • 4.5% 5-year compound annual growth
    • $39,681 per capita
  • Unemployment:
    • 7.2%
  • Inflation (CPI):
    • 1.0%
  • FDI Inflow:
    • $1.2 billion
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Oman’s small, open economy is driven mainly by energy. Tax rates are competitively low, and foreign investment is generally welcome. Recognizing the need for a more broad-based and vibrant private sector, Oman has undertaken regulatory reforms and modernization of its economy.

Economic Freedom Snapshot

  • 2016 Economic Freedom Score: 67.1 (up 0.4 point)
  • Economic Freedom Status: Moderately Free
  • Global Ranking: 52nd
  • Regional Ranking: 6th in the Middle East/North Africa Region
  • Notable Successes: Fiscal Freedom and Trade Freedom
  • Concerns: Rule of Law and Regulatory Efficiency
  • Overall Score Change Since 2012: –0.8

Oman’s transition to a more flexible economy has been uneven. Excessive state involvement in the private sector constrains economic dynamism. Overreliance on the state-owned oil sector leaves the economy vulnerable to external shocks. The rule of law has been relatively well maintained, but the judiciary remains vulnerable to political interference.

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Background

In early 2011, in response to widespread regional turmoil, Sultan Qabus bin Said changed cabinet ministers and promised political and economic reforms. A Consultative Council elected in October 2011 expanded regulatory and legislative powers. As part of the government’s efforts to decentralize authority and allow greater citizen participation in local governance, Oman conducted its first municipal council elections in December 2012. Oman is a relatively small oil exporter. The government is trying to expand exports of liquefied natural gas; develop gas-based industries; and encourage foreign investment in petrochemicals, electric power, and telecommunications. It is also trying to replace foreign workers with local staff to reduce chronically high unemployment. Oman joined the World Trade Organization in 2000 and signed a free trade agreement with the United States in 2006.

Rule of LawView Methodology

Property Rights 55.0 Create a Graph using this measurement

Freedom From Corruption 45.0 Create a Graph using this measurement

Several high-profile corruption cases involving government officials and executives from Oman’s oil industry have been prosecuted in recent years. Many influential figures in government still apparently have private business interests that could create potential conflicts of interest. The judiciary is not independent and remains subordinate to the sultan and the Ministry of Justice. Property rights are well protected.

Limited GovernmentView Methodology

There is no individual income tax, and the top corporate tax rate is 12 percent. There is no consumption tax or value-added tax. The overall tax burden equals less than 3 percent of GDP. Government spending amounts to 45.9 percent of total domestic output in this oil-based economy. A fast-growing population puts pressure on public spending, but public debt remains below 10 percent of GDP.

Regulatory EfficiencyView Methodology

Oman’s regulatory environment is evolving. Starting a business takes an average of eight days, but the required minimum capital equals over twice the average annual income. Labor laws enforce “Omanization,” a policy that requires private-sector firms to meet quotas for hiring native Omani workers. The IMF has warned that absent cuts in state subsidies on petroleum products and electricity, fiscal deficits would climb above 15 percent of GDP.

Open MarketsView Methodology

Oman’s average tariff rate is 2.5 percent. The government screens foreign investment, and ownership levels in many sectors of the economy are capped. State-owned enterprises operate in the energy and telecommunications sectors. The banking sector continues to evolve, with commercial banks performing well. Most credit is offered at market rates, but the government uses subsidized loans to promote investment.

Country's Score Over Time

Bar Graph of Oman Economic Freedom Scores Over a Time Period

Country Comparisons

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Regional Ranking

rank country overall change
1Bahrain74.30.9
2United Arab Emirates72.60.2
3Qatar70.7-0.1
4Israel70.70.2
5Jordan68.3-1.0
6Oman67.10.4
7Kuwait62.70.2
8Saudi Arabia62.10.0
9Morocco61.31.2
10Lebanon59.50.2
11Tunisia57.6-0.1
12Egypt560.8
13Algeria50.11.2
14Iran43.51.7


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