Efforts to address credit downgrades, support the growing Islamic finance segment and tackle the challenge of delayed payments were among the topics explored by Tahir Salim al Amri (pictured), Executive President of the Central Bank of Oman (CBO), at a meeting he had recently with a team from Oxford Business Group (OBG).
Al Amri was talking to the global research and consultancy firm’s representatives as research continues for The Report: Oman 2019, OBG’s forthcoming publication on the Sultanate’s investment opportunities and economic development. The report will feature a wide-ranging interview with Al Amri, in which he will explore these and other topical issues in detail.
In the interview, the CBO’s Executive President analysed the latest monetary policy and banking supervision measures implemented by the bank to help address the current economic challenges.
Al Amri told OBG’s team that the fiscal reforms introduced, including reductions in subsidies, a rationalisation of expenditure and measures aimed at increasing non-oil revenues, were moving forward.
Other topics explored by Al Amri include Oman’s fast-developing Islamic finance segment, which has moved from recording losses in its early days to robust year-on-year (Y-o-Y) growth of 31.8 per cent, or RO 700 million ($1.8 billion) in financing to RO 2.9 billion ($7.5 billion) at the end of September 2017, up from RO 2.2 billion ($5.7 billion) Y-o-Y. The segment’s total assets were also up in the same period, increasing by 23.8 per cent to reach RO 3.8 billion ($9.8 billion) from RO 3.08 billion ($8 billion).
Al Amri told OBG that the introduction of a range of Islamic liability products and better understanding of the structure of their returns had combined to significantly increase inflows. He acknowledged, however, that managing liquidity in the segment remained a challenge.
“We recognise that conventional financial instruments remain unsuitable for the segment,” he told OBG. “With that in mind, we have launched a consultative process with the aim of setting up liquidity management tools, as well as the provision of wakala (agency) arrangements and collateralised partnerships.”
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