Oman plans to bor­row $10b to fund deficit

The Pak Banker - - COMPANIES/BOSS -

Oman plans to bor­row $10 bil­lion from abroad to help fi­nance a bud­get deficit caused by low oil prices, cen­tral bank ex­ec­u­tive pres­i­dent Hamood San­gour Al Zad­jali said to­day.

Al Zad­jali said the govern­ment might is­sue eu­robonds by the middle of this year, but did not com­ment on the size of any eurobond of­fer or give fur­ther de­tails of the for­eign bor­row­ing plan. He also said the govern­ment planned to is­sue 600 mil­lion ri­als ($1.56 bil­lion) of do­mes­tic bonds this year, or about 100 mil­lion ri­als ev­ery two months. It is cur­rently mar­ket­ing a 100 mil­lion rial, fiveyear is­sue with a coupon of 3.5 per cent; the bonds will be auc­tioned on Fe­bru­ary 16.

The bor­row­ing plans un­der­line the heavy fi­nan­cial pres­sure which Oman faces be­cause of cheap oil; the govern­ment has not is­sued an in­ter­na­tional bond since 1997. Last month, Oman ob­tained a $1 bil­lion sov­er­eign loan from in­ter­na­tional banks.

Fi­nan­cial Affairs Min­is­ter Dar­wish Al Beloushi said in Jan­uary that the govern­ment planned to cut its bud­get deficit to 3.3 bil­lion ri­als this year from an ac­tual 4.5 bil­lion ri­als last year, partly through big spend­ing cuts. The govern­ment has de­cided to bor­row abroad to re­duce pres­sure on the lo­cal bank­ing sys­tem, where money mar­ket rates have been ris­ing as in­flows of new oil rev­enues de­crease. A cen­tral bank auc­tion of 91-day Trea­sury bills in late Jan­uary fetched a weighted av­er­age yield of 0.844 per cent, up from 0.201 per cent at a sim­i­lar sale in March last year.

Al Ara­biya quoted Al Zad­jali as say­ing that the cen­tral bank's for­eign re­serves were suf­fi­cient to cover about four months of im­ports. Its for­eign as­sets and gold to­talled 7.09 bil­lion ri­als in Novem­ber, up 8.3 per cent from a year ear­lier, the lat­est of­fi­cial data shows.

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