The potential risks posed by the COVID-19 pandemic and weak oil prices to the sultanate’s financial stability are well-contained, according to the Central Bank of Oman (CBO).
The CBO on Tuesday released the eighth issue of its Financial Stability Report (FSR).
The FSR 2020 indicated that the risks to the financial stability in the sultanate remained on the expected trajectory during 2019 and the confidence of market participants in the Omani financial system stayed high. The report also signified that the risks elevated in 2020 due to the economic and financial impact created by the COVID-19 pandemic.
While acknowledging the challenges posed by the COVID-19 pandemic and the collapse in oil prices, the CBO report asserts that ‘the risks to financial stability are well-contained, considering the renewed efforts to keep the economy on track and the strong financial sector supporting the real economy’.
The FSR 2020 further indicated that while Oman’s nominal GDP declined during 2019 due to lower oil prices, the sultanate witnessed an uptick in the real economic activity measured at basic prices along with low inflation.
‘In the meantime, containing the twin deficit and levels of public debt remain top priorities of the macroeconomic policy in Oman to preserve the macro-financial stability of the economy over the medium term in accordance with Vision Oman 2040,’ the CBO report said.
The report also highlighted the strength of the domestic banking sector, which allowed sufficient policy space to the CBO to counter the impact of the pandemic.
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