Oman seeks to debut maiden Sukuk worth US$517.98 million this year - IFN

Oman seeks to debut maiden Sukuk worth US$517.98 million this year

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OMAN: In a bid to meet its projected budget deficits, Darwish Al Balushi, financial affairs minister of Oman, has confirmed that the government will debut a sovereign Sukuk this year. The Omani government intends to raise approximately OMR200 million (US$517.98 million) from its domestic market as part of its plan to plug the sultanate’s estimated budget deficit in 2014. Darwish has reportedly stated that the government is attempting to absorb the liquidity available in two Islamic banks and the Islamic banking window operations of conventional banks by issuing the Sukuk. “Normally the government issues development bonds to borrow from the domestic market, but this year it will issue Sukuk,” he said. The sultanate witnessed its first Sukuk issuance in October 2013, by Tilal Development Company. Although Sukuk regulations in the country are at a nascent stage, industry experts expound a positive sentiment on the Sukuk market in Oman. It is expected to receive a strong boost in the short to mid-term with the corporate sector and the government looking towards Sukuk issuances as an attractive alternative form of debt issuance. The government is said to borrow OMR400 million (US$1.04 billion) from foreign and domestic markets to plug the budget deficit which has been projected at OMR1.8 billion (US$4.66 billion). Besides the borrowings which consists of OMR200 million (US$517.98 million) in foreign borrowings and Sukuk respectively, a surplus of OMR1 billion (US$2.59 billion) from 2012 and another OMR400 million (US$1.04 billion) in financial reserves will be used to meet the deficit. “We can borrow from local market to meet short-term requirements, while external borrowings are for meeting long-term requirements. Our general debt is OMR1.6 billion (US$4.14 billion) and it is low when compared with the country's gross domestic product. It all depends on the size of the economy and the ability of the government to repay the debt. We are still in safe limits,” affirmed Darwish.