Oman Likely to Issue Bonds to Face Deficit
Business
Muscat- Asharq Al-Awsat
Oman is likely to issue bonds this year but may need to use aid from its neighbors or resort to help from the International Monetary Fund (IMF) if it does not, MUFG's head of Middle East research said. So far, Oman has not tapped the international debt markets despite a widening fiscal deficit amid a slump in oil prices and subdued demand due to the novel coronavirus pandemic. Ehsan Khoman, MUFG's head of MENA research and strategy, said Oman will likely tap the international debt markets because it would not want to draw down too much on its foreign reserves. Until now, the Ministry of Finance did not immediately respond to a request for comment. Moreover, Khoman said Oman can issue bonds because Bahrain, the only other junk-rated Gulf country, has already done so amid the pandemic, raising USD2 billion in May. "If it was to not tap the market, it would need to get that liquidity from somewhere else. So, maybe GCC states, maybe the IMF," Khoman said. Bahraini dinar and Omani rial, which are pegged to the dollar, have seen some pressure in the forwards markets, though that pressure has "come down quite sharply" in the past month, he added. "Our baseline scenario is that Oman will continue to comprise adequate reserve buffers to sustain the currency peg over the medium-term. Though if market risk appetite were to sour, which could lead to an acceleration of asset depletion, then confidence in the peg could diminish," Khoman concluded.
from Asharq AL-awsat https://english.aawsat.com/home/article/2404426/oman-likely-issue-bonds-face-deficit
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