Sources say sultanate, which is rated junk by the three major rating companies, is in talks with local and international banks
Oman, the most vulnerable Gulf country in the oil-price war, plans to raise more than $1 billion in loans in the first half to bridge its budget deficit, according to people with knowledge of the plans.
The sultanate, which is rated junk by the three major rating companies, is in talks with local and international banks about the borrowing, the people said, asking not to be identified because the talks are private. No decision has been made, they said.
If oil prices remain low the government will focus on asset sales and reserves to fill a widening gap, one of the people said. The Ministry of Finance didn’t immediately respond to requests for comment.
The sultanate is still addressing the impact of the last oil price crash in 2014 and is set to post it’s seventh straight budget deficit, according to the International Monetary Fund. With a population of 4 million, the country often serves as a mediator in the region and in recent years refused to follow Saudi policies toward Yemen, Iran and Qatar.
The largest Arab crude producer outside OPEC calculated its 2020 budget with a deficit of 2.5 billion rials ($6.5 billion) based on an average oil price of $58 per barrel, way above oil’s current level of about $35 a barrel.
“Out of the six Gulf countries, Oman is the most vulnerable to current oil prices,” said Ziad Daoud, Bloomberg’s chief economist for the Middle East. The state is part of the Gulf Cooperation Council that includes Saudi Arabia and the United Arab Emirates.
Oman’s newly-appointed Sultan Haitham bin Tariq Al Said said last month he plans to lower debt. The country had planned to borrow 2 billion rials to bridge the bulk of the deficit.