Oman plans to sell a USD-denominated sovereign bond in 2014 that will likely be followed by other issues in the medium term, the central bank said on May 29 in its first ever financial stability report. "By re-establishing Oman's presence in the international bond market, a sovereign issue could pave the way for regular deficit financing through bond issues in future, if need be," the central bank said.

Oman might sell a benchmark USD-denominated sovereign bond in 2014 to create a curve, help boost private-sector debt market and not for financing needs, finance minister Darwish Al Balushi recently said. A benchmark issue is usually worth USD 500mn.

The country will have an average 7.6% gross public debt to GDP ratio over the 2012-2015 period, the central bank said, citing the IMF. The ratio is said to be the GCC’s second-lowest after Saudi Arabia. But the IMF has warned that Oman’s fiscal situation might deteriorate over the next three years. Oman’s state budget might slip into a 3.8% of GDP deficit by 2015, the IMF forecast.

Oman’s central bank acknowledged that the 2013 budget adopts an expansionary fiscal stance, reflecting the government’s policy of generating more jobs by investing in existing infrastructure and hydrocarbon exploration. “The trade-off between improving the life of the population and cost-effectiveness of expenditures will continue to remain a challenge for the policy makers,” the central bank said.

Oman’s budget parameters have remained well-balanced in recent years amid rising crude oil prices and output, helping offset surging spending mainly on social subsidies to quell any social unease. Oman’s budget surplus shrank 17% y/y to OMR 931mn (USD 2.42bn) in January-March 2013 despite rising revenue that was eventually partially offset by higher spending. Oman based its 2013 OMR 12.9bn state budget on a conservative USD 85 per barrel oil price.