Oman To Shrink Public Debt By Repaying Loans Worth RO2.85B

As a part of its Debt Management Strategy, the Ministry of Finance (MOF) will cut down its public debt by more than RO2.85bn (US$7.4bn) by the end of April 2022.

This is in addition to the Ministry’s strive to utilise fiscal surplus (emanating from the uptake of oil prices average rates) to minimise fiscal deficit and shrink the public debt portfolio’s cost and risks.

Budget 2022 earmarked RO1.3bn for the refund of interests on loans, but without prejudice to a commitment to repay maturating premiums to the tune of RO2.7bn.

The MOF pointed out that steps are underway to tap other fiscal surpluses to inspire economic growth in line with His Majesty Sultan Haitham bin Tarik’s Royal directives to implement more development projects that support the private sector, notably by augmenting the Developmental Budget’s allocations to RO1.1bn.

At the end of March 2022, the MOF repaid debt worth RO1.49bn (US$3.88bn), including the refund of a RO850mn loan facility (US$2.2bn) prior to its maturity.

In addition, the MOF is prepaying the RO1.365bn loan (US$3.55bn) in April 2022. This comes in line with the MOF’s efforts to reduce public debt which is estimated to total RO19.46bn by the end of April 2022.

As part of its liability management efforts, the MOF recently settled a RO1.55bn (US$4bn) loan facility agreement. The loan was obtained through a group of 26 local, regional and international financial institutions.

The loan was oversubscribed by more than 150 per cent with a significantly tightened pricing inside the Oman curve, reflecting the market’s validation of Oman’s fiscal reform initiatives and active liability management.

In the last few years, the MOF has undertaken a set of fiscal measures with the aim of reducing Oman’s annual fiscal deficit, whilst addressing the financial situation and enhancing the efficiency of public spending.

Furthermore, it seeks to implement a Debt Management Strategy that aims to smoothen the redemption profile and minimise the refinancing risk of the debt portfolio by replacing high-cost loans with low-cost loans, while extending the maturity.

The MOF also pointed out that the fiscal consolidation measures taken by the Government helped improve fiscal performance indicators, which led to increased confidence from various international institutions and rating agencies. The MOF seeks to utilise the surplus arising from higher oil prices to reduce the fiscal deficit and public debt, affirming that the Government is in a better position to overcome any external shocks.

The MOF reiterated that the Sultanate is making good progress towards the achievement of its national goals and this has been reflected in lower interest rates on financing, in addition to expanded engagement of financial institutions.