Omani MoF: SOE’s must obtain permission before raising funds

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هذه الصفحة متوفرة بهذه اللغة: العربية

15 November 2020

MUSCAT (WAF): Sultan Al Habsi, the Omani Minister of Finance, issued directives preventing State-owned Enterprises (SOEs) and other public agencies from raising funds using any financing instruments, locally or internationally, without obtaining prior approval from the Ministry.

The Financial Circular issued by the Ministry today stated that the step comes after public bodies, institutions and government companies entered into financing agreements with local and foreign bodies “without prior coordination with the Ministry of Finance,” in addition to “issuing international securities in the form of bonds and Sukuk, and these issues coincided with the issuance of sovereign government securities.

In the last few weeks, local and international media reported the intention of SOEs in the energy sector to tap into the international market to finance their operations far from the state budget.

Based on the Financial Circular, public institutions and SOEs are required to “provide the Public Debt Management Department at the Ministry of Finance with the annual financing plan no later than 31 January of each year,” in addition to coordinating with the debt department before appointing funding bodies or coordinating with issue managers, and obtaining prior approval from the department on loan projects before and after completion of the negotiation, and to submit details and terms of bond and Sukuk issuances.

The Ministry stated that the step comes “in order to control the financing needs of local or foreign loans and to limit them to the main necessary priority financing purposes included in the state’s general budget in accordance with the strategies of public debt management.”

It is noteworthy that Oman’s total public debt by the end of 2019 amounted to about 17.6 billion Omani Rials ($45.76 billion), which constitutes 60% of the GDP, and the debt service cost is estimated at 684 million Omani Rials ($17.8 billion).

According to the Ministry’s estimations, within the medium-term fiscal balance plan (Tawazon)- that the cost of servicing the debt will reach one billion Omani Rials in 2020 ($2.6 billion). And that the public debt will rise to constitute 80% of the GDP.