Low oil revenues are prompting the government of Oman to sell $2 billion in Islamic bonds to raise funds for the national budget, according to a new report by Bloomberg.
“We are confident that our economy is heading in the right direction because the government has taken several measures for economic and fiscal reform,” Finance Minister Darwish Al Balushi said in Saudi Arabia. “These measures led to improvement in the fiscal situation and the government will continue to take more measures.”
The hole in Oman’s national budget will measure 12 percent of gross domestic product (GDP) this year, though forecasts predict the shortfall will decrease in coming years. Last year, the gap stood at a whopping 21 percent.
Muscat is also considering forging public-private partnerships to balance the cost burdens of nationalized industries hit by the 2.5-year oil price crisis. Oman plans to pump one million barrels per day on average this year.
The country said earlier this year that it would sell stakes in state-owned oil and gas downstream companies to prop up government finances, but these plans have been in the making for a few years now without concrete action, to the chagrin of international financial observers.
S&P Global Ratings lowered the monarchy’s credit rating from BBB- to BB+ last week, to which the finance minister had prepared a response.
“We respect the opinion of S&P as a professional entity, but at the same time we are confident of the strength of our economy and we trust that the international financial market has a lot of confidence in our economy," Al Balushi said. “It’s true that in the past two years part of our reserves was used to cover the deficit, however, our reserves are still in a comfortable position.”