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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

New fiscal tool to monitor Oman’s financial stability

BALANCE SHEET: ‘Publication of Oman’s International Investment Position (IIP) in line with commitment to financial openness’ - CBO
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MUSCAT: The Central Bank of Oman (CBO) has begun publishing for the first time the International Investment Position (IIP) of the Sultanate of Oman – a new fiscal metric that serves as a balance sheet of a country’s external assets and liabilities.


Oman’s maiden IIP was featured in the 2021 Annual Report of the Central Bank, which was released last week. Commenting on the significance of this new financial indicator, the apex bank noted: “The IIP of Oman is being published for the first time, marking a major milestone in transparency and data dissemination.”


Experts say the IIP can be used to measure the degree of financial openness of a country and to provide indications on the sustainability of its external debt, encompassing both government and private debt. As such, it is also a helpful tool for monitoring financial stability.


According to the Central Bank, foreign liabilities have grown in recent years relative to foreign assets held by residents, resulting in an increase in net liabilities during the 2017-2021 timeframe.


“The difference has increased over the last five years to reach RO 12.800 billion in 2021,” the apex bank stated. “Growth in the stock of liabilities can be explained by financial account developments, specifically the issuance of debt securities by the government to finance its current and capital expenditures. Apart from this, inward FDI has also seen a steady flow during this period, which attest to the sustained trust of foreign investors in Oman’s economy.”


Significantly, the overall stock of foreign assets increased by 7.8 per cent to reach RO 36.575 billion by the end of 2021, up from RO 33.936 million a year earlier.


Contributing to the uptick was an increase in the growth of the overseas investment portfolio of residents, it said.


On the other hand, the stock of foreign liabilities increased 9.7 per cent to reach RO 49.375 billion at the end of 2021, up from RO 45.021 billion a year earlier. This increase was attributable to FDI inflows and debt securities, which grew by 9.6 per cent and 12.5 per cent respectively.


“As a result of these developments, the net borrowing IIP position continued to widen, reaching RO 12.8 billion by the end of 2021, up from RO 11.058 billion, albeit lower as a percentage of GDP,” the Central Bank added.


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