Oman’s total debt touches OMR2.48b

Muscat: Oman, which recently raised $2.5 billion from the overseas market for plugging a widening budget gap, has enough room for mobilising loans in the future from abroad in view of its low debt-to-gross domestic product (GDP) ratio.
The total outstanding debt of the Sultanate by the end of 2015 stood at OMR2,481.3 million, which was equivalent to 9.2 per cent of its GDP and much lower than many other developed and developing countries. In 2014, the total outstanding debt was lower at OMR1,526.3 million, which was equivalent to 4.8 per cent of the GDP.
There is enough room for the Sultanate to enhance its borrowing programme, considering the fact that the ratio is much low, compared with several developed and developing countries.
In the Middle East region, the debt-to-GDP ratio ranges anywhere between 7 per cent and 39 per cent and Gulf Cooperation Council (GCC) countries have a low ratio. “Oman’s debt-to-GDP ratio is the lowest in the Gulf region, which offers enough room for additional borrowing for development needs,” said S Suresh Kumar, head of Research at Al Maha Financial Services.
He added that countries, such as Malaysia, South Korea, Taiwan and China, have a high debt-to-GDP ratio, which ranges between 30 per cent and 50 per cent, while Latin American countries (barring Chili) have a high debt-to-GDP ratio, ranging anywhere from 40 per cent to 60 per cent.
Debt-to-services ratio
The Sultanate repaid OMR122.3 million in principal and interest in 2015, against OMR142.3 million in the previous year. The country’s debt-to-services ratio (principal and interest repayment of government’s external debt as a percentage of export of goods and services) stood at 0.7 per cent in 2015, against 0.5 per cent in the previous year.
As far as domestic borrowing last year is concerned, there were two government development bond issues totalling OMR500 million and a sovereign sukuk of OMR250 million.
“At the end of December 2015, the outstanding government development bonds amounted to OMR1,330 million, compared with OMR930 million at the end of the previous year,” according to the recently released annual report of the Central Bank of Oman (CBO).
The CBO report also noted that with a view to finance the fiscal deficit, the authorities have planned to utilise fiscal buffers, raise loans from the domestic market without crowding out credit to the private sector and access external markets by the sovereign and government-related entities.
The successful raising of $1 billion in 2015 and of $2.5 billion in June 2016 underscores strong investor appetites. Authorities also plan a partial sale of public sector entities to the State General Reserve Fund, which would reduce immediate financing pressures.
CBO’s financial stability report pointed out that the Sultanate’s net debt position relative to other Gulf Cooperation Council countries has remained manageable, but the International Monetary Fund predicts that the trend will deteriorate in the coming years.
Oman had posted a current account surplus in 2014, which has become a deficit in 2015, and this deficit is projected to continue in 2016 and 2017.
The current account deficit for 2015 is expected to be 15.4 per cent of the GDP.