Since the start of the COVID-19 pandemic, the Supreme Committee has instructed the Central Bank of Oman to defer loan repayments from private companies and people.
We are, of course, most appreciative of them taking this effort, because many of us were forced to delay repaying our loans, or could not repay them altogether, because of the impact the pandemic has had on everyone. That loan deferment programme, however, ends this month. Although – we hope – we are now near the end of this pandemic, the damage it has caused over the last one and a half years cannot be undone in just two or three months. We need far longer time to recover.
I feel that the support the Supreme Committee has given to us needs to stay for at least another 12 months or even longer, some people may say, because I do not think it is stretching a fact too far to say that some companies might even take years to recover the losses. According to experts, there are companies that do not need the deferment programme because the pandemic did not affect their business.
The private sector needs more time to become stable again. I, therefore, request the Central Bank to extend the loan repayment schedule and other sops given to companies. Yes, I understand that there are other countries around the world where COVID concessions for companies are being withdrawn, but there is an important difference between the way Oman operates and the way others do.
Some countries lower their interest rates for borrowers when their economies are not performing well, but that is not the case here, where they stay constant. During the pandemic, some even lowered their interest rates to zero.
Countries such as the US, Canada, the UK, Australia, Kuwait, Jordan, Norway, Pakistan, Saudi Arabia, Paraguay and Moldova actually cut their interest rates multiple times during the pandemic to minimise the impact on businesses.
That is why it is sometimes difficult to do business in Oman, compared to other countries. Some might think that people with multiple businesses might be safer, because the profit earned by one of their activities can help compensate for the losses of others.
The owners of these businesses then take loans to support the one that’s making a loss, but are unable to repay them because of the current circumstances, as a result of which banks classified them. This affects all their economic activities because when they take a loan against one of their businesses that is doing well, they are denied one, as they still owe the bank money for the loans taken previously to help their faltering business.
If, however, banks consider the loans of each individual business on its own merit, then they can thrive, enabling them to put money into their loss-making entities and turn them around. People want their businesses to thrive, after all, and this form of loan provision could only jeopardise the future of their company as they won’t get money when they need it most.
Oman is, of course, not alone in grappling with the economic impact of the pandemic: the entire world is drawing up plans to offset its effect. Maybe the banks are of the opinion that if they aren’t strict with their lending policies, foreign investors and overseas businesses will not want to set up shop in our country.
That, however, is not true, as countries around the world are trying to court investors right now, and Oman is no exception to this rule.
Now is the time for radical and innovative thinking to kick-start the economy as the pandemic continues to ebb. To this effect, a number of countries have introduced stimulus packages to help businesses and people.
The UK, Canada, New Zealand, the United Arab Emirates, Saudi Arabia, the US, Australia, and dozens of other countries have announced financial packages worth billions, even trillions of dollars to boost their economies and help people impacted by the disease.
The lapse of the loan deferment period means many companies are facing impossible hurdles in terms of finding money that needs to be repaid to the banks, along with the interest owed on them.
While we would definitely appreciate more being done to help private sectors, the interest due on these deferred repayments can be lifted, to provide us some breathing space right now.
We are not asking for the public sector to rescue us right now, but we definitely need more help to get out of the impact of the pandemic. Owners of such activities are of course willing to pay back their loans, but are powerless in the face of such massive global upheaval.
Foreign investors and local businessmen are willing to set up operations in the country.
Giving a better environment will only make them eager to do so, and help them navigate through tough times such as the ones we are currently facing.