H E Zadjali discusses new FDI law with TBY
Muscat – The Business Year (TBY) recently met H E Hamood Sangour al Zadjali, executive president of the Central Bank of Oman (CBO), to discuss about Oman’s new foreign direct investment (FDI) law, international bond issuance, government development bonds and sukuk, market liquidity and guidelines on financing to small and medium enterprises (SMEs) .
TBY is a leading research firm and publisher of annual economic resources on national economies.
With a view to attract longterm foreign investment flows the FDI law is being revised comprehensively, H E Zadjali told TBY, according to a press release.
He said, “The new law will address major concerns and shortcomings in the current law. Foreign investors’ rights and obligations will be clearly set out in the new law, and it will also provide dispute resolution and include international arbitration.”
In order to finance the sultanate’s fiscal deficit, H E Zadjali said Oman government had raised US$5bn as of March 2017 through international bonds in tranches of five, ten, and 30 years bonds. “In order to preserve fiscal buffers and taking advantage of relatively low cost of funds in international financial markets, the government has resorted mainly to external commercial borrowings which elicited positive investor appetite.”
He added that the public-sector enterprises and conventional banks have also been encouraged to meet their long-term funding needs via medium-term borrowing from abroad.
With regards to liquidity, the CBO has continued its accommodative monetary policy stance, continuously monitoring the liquidity situation and ensuring the availability of adequate credit for productive activities. “The CBO has also taken regulatory and supervisory measures so that banks remain well capitalised and healthy in the face of incipient delinquency due to economic slowdown,” H E Zadjali said.
Oman’s capital market also saw four issuances of government development bonds mobilising a total of RO450mn, and one redemption amounting to RO150mn during 2016. There was also an Ijara sukuk issuance by private placement worth US$500mn during the year.
“With the diversification of the economy, the corporate sector in Oman is also expected to raise resources from the market by issuing debt securities,” H E Zadjali said.
He said the CBO is continuously making efforts toward promoting SMEs and facilitating diversification of the economy. “The CBO has also mandated a formal credit target of five per cent of the total credit of the banks to be assigned to the SME sector.”
H E Hamood Sangour al Zadjali