Oman channels financial surplus to reduce public debt by RO 1.1bn

MUSCAT: The Sultanate of Oman on Wednesday repaid part of the government loans, about $1.5 billion, ahead of their date of maturity.

At the same time, Oman also reduced the interest rate for some loans through negotiation with lenders. This resulted in obtaining a lower financing cost than the currently prevailing financing rates. The step confirms Oman’s robust financial position.

It fits within the framework of continuous revision of the lending portfolio and related financing costs and affirms the government's determination to cut down public debt rate, taking advantage of the additional financial revenues and the rise in global oil prices.

Thus, the government managed to settle a number of obligations by the end of the first quarter of 2023 estimated at about RO 1.1 billion or $2.8 billion, without resorting to re-borrowing to finance them. This includes $1.3 billion repaid by the government in January 2023. As a result, the public debt will be cut down to about RO 16.6 billion by the end of March 2023, compared to RO 17.7 billion reported at the end of 2022.

The Ministry of Finance affirmed that the measures taken will lead to achieving more savings in the cost of servicing public debt and the benefits accruing from financing, estimated at about $1 billion, or about RO 385 million, by calculating the periods of financing segments and not resorting to borrowing for refinancing. This would enable the government to utilize these savings in priority areas.

Through early repayment of some loans, the government seeks to alleviate the burden of public indebtedness, manage the risks of the lending portfolio and reduce potential pressures towards financing obligations in the coming years, the Ministry of Finance explained.

These measures to cut down public debt assume significance in light of the high interest rates approved by the US Federal Bank. The move also aims at improving Oman’s credit rating indicators. - ONA