Muscat - With the budget deficit continuing to swell amid the steep drop in oil revenues, Oman plans to turn to international funding sources to plug up to 70 per cent of its shortfall this year, according to the chief of the Central Bank of Oman.
Hamood Sangour al Zadjali said the government has been involved in a financing programme whereby a large portion of its deficit will be covered by external borrowings and partly by local borrowings, through bonds and sukuk.
“As we move on, financing from external borrowings would cover 60 to 70 per cent [of the budget deficit]. This will include eurobonds, direct placement of debt and from international funds and institutions. And, the remaining [budget shortfall] would be met by drawing down our reserves and by issuing bonds and sukuk in the local market,” the executive president of the CBO said.
He said that Oman has seen a big appetite for its debt in the international markets. “In terms of borrowing Oman's reputation in global markets is very good.
Our debt ratio was very low in 2015 and global interest rates are still low with markets flush with liquidity.”
As the government looks to the public-private partnership (PPP) route for major projects,
H E Zadjali expressed confidence that the country's banking system is in a position to facilitate the private sector's role in economic development.
“In the current challenging times, the central bank's job is to maintain financial stability and to ensure that the banking sector is sound, resilient and able to support economic development,” he said.
“Our banks are well-capitalised and non-performing loan ratios are very low. We have introduced many regulations and directives to ensure that there is enough liquidity to support credit growth to the private sector,” H E Zadjali added.