Muscat: The Sultanate has managed to repay part of the public debt from the financial surplus it achieved due to increase in oil prices and fiscal and governance reforms, contributing hugely to the improvement in the general economic condition.

The Sultanate, of late, is making all-out efforts to bring public debt within safe limits.

Aseel bint Mohammed Redha Al Lawati, Director of Public Debt Management Unit at the Ministry of Finance said at an Al Shabiba Programme, ‘Ma’a Al Shabiba’ that the Public Debt Management Unit was established in 2016 and since then the unit has constantly endeavoured to manage effectively the Sultanate’s public debt portfolio and associated risks, including timely access to appropriate finance of the portfolio, review of existing loans, refinance of loans at low cost and diversification of the sources of local and international finance.

This has helped curb public debt growth, attributable to deficit financing since 2015 and later due to the impact of Covid-19 pandemic. The public debt had exceeded OMR20 billion, she added. The external public debt accounts for 75 percent of the public debt portfolio.

Since the beginning of the current year, we have achieved financial surplus due to increase in oil prices for the first time since 2014, she said, adding that we have used part of the surplus in early payment of loans/borrowings. At the end of August 2022, the public debt has come down to approximately OMR18.4 billion, thus enabling the economy to avoid any crises in the future, mitigate the risks and to generate future savings.

On repayment of public debt, she said that approximately OMR2.4 billion of the public debt has been paid, exceeding our expectations. During the current year, OMR4 billion will be paid. In March, we re-financed a loan due for payment in 2023. This is in addition to the early payment of some loans such as the Chinese loan which amounted to US$3.6 billion besides the re-purchase of sovereign government bonds in the local market.

For instance, the debts due for payment between 2023 and 2025 exceeded OMR6 billion which amount is expected to reduce to less than OMR5 billion.

According to the latest reports issued by the credit rating agencies, one of the reasons for upgrading the Sultanate’s credit rating is the decrease of pressure on external debts, she said, adding that next year in January the maximum external finance would be approximately US $1.25 billion.

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