Middle East and Central Asia > Oman

You are looking at 1 - 10 of 94 items for

  • Type: Journal Issue x
Clear All Modify Search
Thomas Kroen
Underpinned by Vision 2040, Oman aims to reduce its economic reliance on the hydrocarbon sector by diversifying its economy. Reforms are targeted to develop a well-diversified, private-led, sustainable, and inclusive economy where innovation and knowledge play a more prominent role. This requires the existence of a well-developed, inclusive, and stable financial sector that can navigate the country’s transformation and fund the new economy. As the economic transformation gains traction and entrepreneurship and innovation take center stage, Oman’s financial sector will face a more complex environment where it needs to develop innovative financial and risk management solutions to cater for the emerging and expanding financial needs of the different players in the economy. Against this background, this note provides an assessment of the development of Oman’s financial sector, identifies areas for potential improvement, and proposes policy actions to foster further financial development and inclusion.
Muayad Ismail and Haytem Troug
Oman’s potential nonhydrocarbon real GDP growth has trended downward since the global financial crisis, with a negative contribution from total factor productivity. This paper estimates productivity gains associated with structural reforms and identifies key binding constraints and reform priorities to boost productivity in Oman. Our results show that reforms to reduce the state’s footprint and strengthen institutions, as well as product market reforms, should be prioritized and packaged together to magnify productivity gains from labor market and financial sector reforms. These findings could inform the planning and implementation of the ongoing structural reform agenda envisaged under Oman Vision 2040.
Thomas Kroen
Amid a pegged exchange rate to the US dollar and an open capital account, Oman’s policy rates move closely with US monetary policy. In this analysis, we show empirically that transmission from policy rates into effective lending and deposit rates remains subdued in Oman, even compared to GCC peers that similarly face a high oil price environment with persistent excess liquidity in the banking system. A cap on personal loan rates and low exposure of banks to SMEs and riskier borrowers limit passthrough into effective lending rates and credit conditions. The note documents ongoing actions by Omani policymakers to strengthen transmission and provides further recommendations on liquidity management, reserve management, and relaxing the interest rate cap.