Oman plans to borrow $10b from overseas markets, says CBO chief

Business Monday 24/October/2016 15:20 PM
By: Times News Service
Oman plans to borrow $10b from overseas markets, says CBO chief

Muscat: Oman plans to borrow as much as $10 billion from overseas markets in the next four years to meet budget deficit in the aftermath of a severe fall in oil revenue.
These borrowings, between 2016 and 2020, will be in the form of euro bonds, deposits from international institutions and bonds, said Hamoud Sangour Al Zadjali, executive president of the Central Bank of Oman, while speaking at the Outlook Oman Forum here on Monday.
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“A steep fall in oil prices has caused a large deficit in the budget since last year. The government has to look for ways to meet these challenges – reduce expenditure on the one side and look for avenues of funds,” added the CBO chief.
Al Zadjali said that as much as 60-70 per cent of the budget deficit will be met by way of external borrowings, while drawings from State General Reserve Fund (SGRF) will also help reduce deficit. “A large portion of the deficit will be covered by external borrowing.”
Besides, the government will raise funds by way of development bonds and sukuk in the domestic market to meet budget deficit.
There are several favourable factors for Oman to borrow money from overseas markets, which include low interest rates, apatite among foreign lenders to park their funds in Oman and reputation of the Sultanate’s government among overseas lenders.
Also, Oman’s debt-to-gross domestic product (GDP) ratio (a common parameter used for measuring the indebtedness of a country) is low compared to several developing countries.
“The drop in oil prices has caused challenges in managing the fiscal position of the country. Several initiatives have taken by the government to overcome these challenges,” noted the CBO chief.