Muscat – The removal of COVID-19 restrictions and higher oil prices have boosted Oman’s economic recovery and significantly raised the confidence in the stability of macro-financial system in 2022, according to the results of a survey conducted by the Central Bank of Oman.

The CBO’s Systemic Risk Survey (SRS) is an anuual survey that asks market participants and other stakeholders about perceived risks to, and their confidence in, the stability of Oman’s macro-financial system. Results of the survey were published in the CBO’s Financial Stability Report 2022.

‘As revealed by responses to SRS 2022, the relative improvement in the overall economic dynamics due to the ease of COVID-19 restrictions and rising oil prices significantly raised the degree of confidence in the stability of Oman’s macro-financial system in 2022,’ CBO said in the report.

The percentage of respondents who described themselves as ‘very confident’ or ‘fairly confident’ in Oman’s macro-financial system jumped from 54 per cent in 2021 to 86 per cent in 2022.

Meanwhile, the percentage of respondents to SRS 2022 who were ‘just confident’ declined to 13 per cent from 42 per cent in 2021, and the responses in favour of ‘not at all confident’ dropped to only one per cent in 2022 from four per cent in the previous year.

The survey is generally completed by officials from banks, non-banking financial establishments, financial sector regulators, other governmental institutions, professionals from public and private business sectors, and academics in the fields of economics and finance. The results are based on responses to the SRS 2022, conducted in March 2022, and do not reflect the views of CBO.

The survey found that the level of respondents’ confidence in the Omani macro-financial system remarkably increased as the pandemic fades away. In SRS 2022, more than half (51 per cent) of the respondents reported an increase in their confidence over the last six months preceding taking the survey compared to only 15 per cent in 2021, while 41 per cent declared ‘unchanged’ confidence compared to only 8 per cent a year ago.

Remarkably, only 8 per cent of participants to SRS 2022 responded that their confidence ‘decreased’ this year as compared to 77 per cent in 2021.

According to responses to SRS 2022, the perceived probability of an event with a high negative impact occurring in Oman’s financial system over the short term (up to one year ahead) dropped considerably in line with recovering demand as the pandemic lockdown measures eased globally as well as the recent surge in oil prices.

Only 8 per cent of the respondents judged this probability to be ‘high’ or ‘very high’ in 2022, compared to 27 per cent in SRS 2021. Moreover, the percentage of respondents who viewed this probability as ‘low’ or ‘very low’ increased from 37 per cent in 2021 to 55 per cent in 2022.

Interestingly, the participants’ expectations of such a negative event occurring over the medium term (1-3 years ahead) witnessed a smaller change between 2021 and 2022. The percentage of respondents who viewed this probability as ‘high or very high’ slightly declined to 20 per cent in 2022 from 24 per cent in 2021. However, the percentage of those who judged this probability as ‘low or very low’ jumped to 39 per cent in 2022 from 25 per cent a year ago.

Within Oman’s financial system, conventional banks, Islamic banks, and currency exchange companies are viewed as the most solid financial intermediaries in 2022, while finance and leasing companies, mutual funds, and capital market institutions are perceived as the most vulnerable to adverse shocks, as per the survey.

CBO’s Financial Stability Report 2022 noted that the policy actions taken during the pandemic and post-pandemic recovery so far have diminished the short-term risks to financial stability.