H E Zad­jali dis­cusses new FDI law with TBY

Muscat Daily - - FRONT PAGE -

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

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