Oman plans to delay the implementation of value-added tax to 2021 amid sluggish economic performance, according to media reports.

Oman – together with the other five states of the Gulf – agreed to introduce VAT in 2018, although it later delayed its implementation to 2019.

However, in a bond prospectus seen by Reuters, Oman said it “expected VAT to be implemented in 2021.”

Last month, the International Monetary Fund (IMF) said that Oman should work harder to implement economic reforms, including adjusting government expenditure and expediting the implementation of VAT.

According to a recent report from the Institute of Chartered Accountants of England and Wales (ICAEW) and Oxford Economics, Oman’s economy is expected to experience modestly weaker growth of 2.8 percent this year, down from an estimated 3.3 percent in 2018 but up from the 0.9 percent drop in 2017.

The slowdown is partly driven by forecast oil prices of $67 per barrel, down 5.6 percent from 2018’s average. An estimated 60 percent of Oman’s total budget revenue comes from oil revenue.

“The slump in oil prices has put significant pressure on Oman in the last year,” said Maya Senussi, ICAEW economic advisor and senior economist for Middle East at Oxford Economics. “There is a dire need for an improvement in the non-oil sector and delaying the introduction of VAT has had a significant effect on the fiscal deficit.”

The ICAEW report said non-oil activity in Oman remains “tepid” despite increased state sending and domestic demand.

Additionally, debt dynamics are expected to deteriorate in the absence of fiscal consolidation, with public external debt expected to reach 56 percent of GDFP at the end of the year.

Oman’s real estate market was found to be continuing a downward trend, with the value of sold properties falling by 12.2 percent in Q1 from a year earlier. There has been, however, an uptick in tourist numbers and associated revenue in the first four months of 2019.

However, the public sector budget’s heavy reliance on energy revenue will likely limit its ability to support growth and spending.