Muscat – Despite a turbulent global environment marked by geopolitical tensions, trade frictions, and heightened volatility in financial markets, Oman’s financial system continues to demonstrate remarkable resilience, according to the Central Bank of Oman (CBO).

The CBO on Tuesday released its 2025 Financial Stability Report, offering a comprehensive and forward-looking assessment of Oman’s financial system. The report highlights the strength of Oman’s financial foundations, the confidence of its institutions, and the nation’s capacity to thrive amid evolving domestic and global dynamics, reaffirming Oman’s steady path towards long-term stability, growth, and prosperity.

In his foreword to the report, H E Ahmed al Musalmi, Governor of the Central Bank of Oman, said renewed geopolitical tensions, persistent trade frictions, and heightened volatility in commodity and financial markets continue to pose challenges to both global and domestic stability.

“Despite such headwinds, Oman’s financial system has remained resilient. Over the past five years, financial institutions, households, and businesses have successfully navigated the pandemic, a period of rapid monetary tightening, and a turbulent external environment,” he said.

H E Musalmi noted that the sultanate’s banking sector remains well-capitalised and liquid, with profitability supporting organic growth. “Asset quality has been maintained, and both household and corporate balance sheets remain sound. While debt levels as a share of GDP have risen slightly, they remain broadly aligned with historical norms,” he said, noting that credit conditions stayed stable throughout 2024, with lending standards easing marginally and business credit demand expected to remain robust into 2025.

He also pointed to significant domestic milestones achieved by Oman in recent years, including structural reforms that strengthened fiscal fundamentals and restored investment-grade sovereign ratings from both S&P Global and Moody’s.

According to H E Musalmi, regulatory and legislative advances have modernised the financial sector’s framework. “The enactment of the new Banking Law and the Central Bank of Oman (CBO) Statutes has enhanced the legal architecture, enabling timely and effective responses to an evolving financial landscape. In parallel, the updated Bank Deposit Protection Law has further aligned Oman’s financial safety nets with international best practice, strengthening depositor confidence and reinforcing systemic stability.”

To support sustainable and inclusive growth, the CBO has encouraged credit flows to productive sectors aligned with Oman Vision 2040.

“New guidance on green finance is helping build resilience against climate-related financial risks, while the regulatory sandbox continues to foster safe financial innovation. Recent frameworks for digital and open banking are expanding competition, enhancing efficiency, and modernising the financial sector,” H E Musalmi said.

He further emphasised Oman’s steady economic diversification, underscoring the country’s long-term commitment to sustainable and resilient growth.

“Oil and gas remain an important pillar of the economy, but their global interconnectedness highlights the need for ongoing prudence in navigating external risks. These potential headwinds – whether from global slowdowns or heightened geopolitical tensions – are being met with foresight, adaptability, and sound policy measures,” he added.

The CBO’s stress tests confirm that Oman’s financial system is well-positioned to withstand a range of macro-financial shocks while continuing to serve as a driver of economic activity. Confidence in the sector’s resilience is further reinforced by the latest Systemic Risk Survey, which showed strong trust among stakeholders in the financial system’s adaptability and soundness.

“While global uncertainties persist, Oman’s financial sector is not only capable of weathering them but is also well placed to actively support the nation’s growth trajectory and safeguard long-term stability,” H E Musalmi said. “A strong and resilient financial system is vital to sustaining economic progress and mitigating future risks. The CBO remains fully committed to preserving financial stability through close oversight, proactive measures, and the readiness to act decisively in response to emerging challenges.”