The outlook for Oman’s banking sector was cut to negative by Moody’s Investors Service to reflect a reduction in the government’s ability to support the country’s banks, weaker economic growth and tightening liquidity.
“The Omani government has a reduced capacity to support banks in case of need, owing to fiscal deterioration,” said the credit ratings agency in a statement on Tuesday.
“We expect a softening in Oman’s operating environment, with fiscal consolidation amid prolonged oil price weakness weighing on economic growth,” said Mik Kabeya, analyst at Moody’s.
“This will weigh on credit growth, which we forecast to fall to five percent in 2017, down from 10.1 percent in 2016.”
The change from stable comes after Moody’s last month cut the rating of the sultanate to the second-lowest investment grade, saying its progress toward addressing structural vulnerabilities to a weak oil price environment has been more limited than expected.
A halving of crude prices since 2014 left Oman with a budget gap of almost 22 percent of economic output in 2016, according to the International Monetary Fund.
Slower economic growth will drive a marginal weakening in problem loans to around 3 percent of gross loans in 2017-18, from 2.1 percent at end-March 2017, according to the rating agency.
“Funding and liquidity conditions will remain tight, as high domestic government borrowing limits funds available to lend to the wider economy,” Moody’s added.
Nonetheless, the government’s international bond issuances, slower credit growth and higher oil prices will moderate the pressure.
Oman in August signed an agreement for $3.5 billion in loans from Chinese financial institutions and in May raised $2 billion through an Islamic bond sale, which lured orders for more than three times the issue size.
Source: Arab News
GMT 17:47 2018 Monday ,15 January
‘Negative’ outlook for Gulf sovereign ratings in 2018, says Moody’sGMT 19:27 2018 Sunday ,07 January
UAE pledges to distribute 70% of VAT proceeds to help fund community projectsGMT 19:21 2018 Sunday ,07 January
Surge in foreign fund inflows sets stage for Egyptian boomGMT 19:15 2018 Sunday ,07 January
Iraq to export Kirkuk oil to Iran before January-endGMT 11:35 2018 Wednesday ,03 January
Saudi Food and Drug Authority: No VAT on human medicines, vitamins, and registered medical equipmentGMT 10:00 2018 Wednesday ,03 January
Saudi Customs launches Approved Economic Operator programGMT 07:30 2018 Wednesday ,03 January
Morocco’s 2017 Economic Growth: GDP on the Rise, Investment in DeclineGMT 18:33 2018 Monday ,01 January
No New Year cheer for UAE property marketMaintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©
Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©
Send your comments
Your comment as a visitor