MUSCAT: The National Programme for Fiscal Sustainability and Financial Sector Development (Estidamah), spearheaded by the Ministry of Finance, has unveiled a comprehensive roadmap to propel Oman's financial sector into a new era. Encompassing both banking and capital markets, the plan boasts over 74 transformative initiatives grounded in six key pillars and fueled by four critical enablers.
Estidamah (meaning ‘Sustainability’ aims to achieve demonstrably positive outcomes by 2025, with a clear baseline established in 2022. Its execution will be a collaborative effort with relevant authorities, seamlessly dovetailing with the 10th Five-Year Plan.
Nasser bin Khamis al Jashmi, Secretary-General of the Ministry of Finance and General Supervisor of Estidamah, underscored the impetus behind this ambitious move: "This plan builds upon the remarkable success of the 2020-2024 medium-term financial plan. We've reduced the average oil break-even price, shrunk public debt, and witnessed a credit rating upgrade. The government remains steadfast in its commitment to strengthening financial indicators and propelling the financial sector forward."
Estidamah, approved under Royal Directives, kicked off in 2023 and spans three years, serving as a pivotal force in realizing the "Oman 2040" vision. Al Jashmi elaborated, "Financial sustainability unlocks efficient allocation of resources towards high-yielding development projects that catalyze economic progress. Estidamah will engage public and private stakeholders to cultivate a vibrant and sophisticated financial landscape, a potent contributor to our Gross Domestic Product."
Mahmood Abdallah Ahmed al Aweini, Director of Estidamah, outlined the program's core objectives: "Our focus spans enhancing national financial indicators and evolving the financial system to empower individuals and institutions in their diverse developmental roles." He further emphasized, "We aim to invigorate private sector participation, ensuring diverse financing options reach key groups like SMEs, entrepreneurs, investors, nascent companies, and sectors driving economic diversification."
The program's working themes included providing financing options for small and medium enterprises, directing funding to targeted sectors, developing a sustainable green finance system, activating the role of the capital market, enhancing attractiveness for foreign investments, and activating the insurance sector. The program also focused on four enablers: fintech, Legal & Regulatory Landscape, financial literacy, and Human Capital Development.
During the study phase, the program identified challenges such as limited financial services and products suitable for different groups, concentration of financing opportunities in traditional sectors, low liquidity levels in the capital market, and the absence of opportunities related to fintech and sustainable green finance. Furthermore, there was limited qualified human resources in the financial sector.
Estidamah has already made significant strides in collaboration with relevant authorities. Notable examples include:
Market Maker and Liquidity Providers Initiative: Working with the Capital Market Authority to issue regulations for market makers and liquidity providers, licensing two companies—United Securities and Ubhar Capital—to act as market makers and liquidity providers. The actual activity of the liquidity provider commenced in mid-January 2024, contributing to enhancing market liquidity and making Muscat Stock Exchange a more attractive emerging market globally.
Green/Sustainable Financing Initiatives: Estidamah program unified efforts to ensure legislative and regulatory readiness in Oman, enabling the public and private sectors to access green financing at minimal costs. This includes the issuance of a reference framework for sustainable sovereign financing by the Ministry of Finance and the launch of a guidance directory and triple governance disclosure platform for listed companies by the Muscat Stock Exchange.
Insolvency Law Initiative: Developing a systematic regulatory framework for increasing individual insolvency cases and establishing a system that balances the rights of creditors and debtors. The program collaborated with the Supreme Judicial Council, the Central Bank, and the Ministry of Social Development to formulate a draft personal bankruptcy law along with the executive regulations, with the hope of adoption through the legislative process.
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