Muscat – As part of its debt management strategy, the Ministry of Finance (MoF) will cut down the country’s debt by more than RO2.85bn in April 2022, thereby reducing its public debt to RO19.46bn in the first four months of the year.

Budget 2022 earmarked RO1.3bn for payment towards interests on loans, but without prejudice to a commitment to repay maturing debt to the tune of RO2.7bn.

At the end of March 2022, MoF had repaid debt worth RO1.49bn, including the repayment of RO850mn loan prior to its maturity. In addition, the ministry will be prepaying the RO1.365bn loan in April 2022. ‘This comes in line with MoF’s efforts to reduce public debt which is estimated to total RO19.46bn by the end of April 2022,’ it stated.

As part of its liability management efforts, the ministry recently settled a RO1.55bn loan facility agreement. The loan was obtained through a group of 26 local, regional and international financial institutions. ‘The loan was oversubscribed by more than 150 per cent with a significantly tightened-pricing inside the Oman curve, reflecting the market’s validation of Oman’s fiscal reform initiatives and active liability management.’

The government plans to utilise the surplus arising from higher oil prices for enhancing development spending to stimulate economic growth and support development projects, repay part of public debt, reduce fiscal deficit and minimize the cost and risks of the debt portfolio.

The ministry pointed out that steps are underway to tap other fiscal surpluses to inspire economic growth in line with His Majesty Sultan Haitham bin Tarik’s Royal directives to implement more development projects that support the private sector, notably by augmenting the Developmental Budget’s allocations to RO1.1bn.

In the last few years, MOF has undertaken a set of fiscal measures with the aim of reducing the annual fiscal deficit, whilst addressing the financial situation and enhancing the efficiency in public spending. Furthermore, it seeks to implement a debt management strategy that aims to smoothen the redemption profile and minimise the refinancing risk of the debt portfolio by replacing high-cost loans with low-cost loans, while extending the maturity.