Oman rolls out Dh76.4bn incentives package to offset economic impact of coronavirus
The regulator cut the interest rate on short-term lending to banks and ordered lenders to cut fees, adjust their capital ratios and be flexible with repayments for up to six months
Oman’s central bank is pushing out an 8 billion Omani riyal (Dh76.4bn) incentive package for financial institutions to ease the impact of the coronavirus on its economy.
“The central bank has issued a series of directives to all banks, exchanges and financing institutions operating in the sultanate that includes a set of incentivising and precautionary measures" that aim to contain the effects of the current developments on the national economy, the banking regulator said in a statement carried by the Oman News Agency.
The central bank also cut its repo rate by 75 basis points to 0.5 per cent and ordered banks to cut fees, adjust their capital and credit ratios and be flexible with repayments for up to six months, especially for small and medium-sized businesses. The repo rate is the rate of at which the central bank lends money to banks.
Oman joins the UAE and Saudi Arabia in introducing economic stimulus packages amid global efforts to fight the impact of the virus that has roiled markets and disrupted trade, supply chains, travel and tourism. The pandemic is the biggest challenge to the global economy since the 2008 global financial crisis and has wiped off at least $17 trillion (Dh62.4tn) form stock markets worldwide. The number of global cases has topped 200,000 on Wednesday, with more than 8,000 deaths. The recovery rate continues to climb, with 82,000 patients clear of symptoms.
Oman's far-reaching measures entail ensuring easier lending to sectors that may be affected by the pandemic including health care, travel and tourism.
The central bank is raising the lending rate by 5 per cent to 92.5 per cent and reducing the capital requirement to 1.25 per cent from 2.5 per cent.
The regulator instructed financial institutions to allow delays in loan and interest payments for borrowers adversely affected by the current conditions, particularly SMEs, for six months. It also directed financial institutions to be flexible in dealing with loans related to funding government projects.
Financial institutions should also consider reducing current fees on various banking services and refrain from imposing new fees, the regulator said.
Measures include adjustments in the pricing of open market tools to maintain adequate levels of liquidity in the local market.
The regulator asked banks to be prepared for dealing with any increase in demand for financing and banking services, to encourage clients to use online services and to remain alert about cyber security.
Oman’s move followed similar measures by Saudi Arabia, the UAE and Egypt. Saudi Arabia announced a 50 billion riyal (Dh48.9bn) stimulus package, the UAE launched a Dh100bn economic plan and Egypt unveiled a 100bn pound (Dh23.3bn) programme to mitigate the pandemic's impact on banks, the private sector and wider economy.
From Tuesday, Oman barred the entry of non-Omanis into the sultanate by land, sea or air, with the exception of nationals and citizens of other GCC states.
Everyone entering the country, including Omanis, will have to undergo a 14-day quarantine period. Foreigners holding Omani residence cards will be allowed re-entry, and passengers in transit can enter the country but cannot leave its airports.
Updated: March 18, 2020 05:00 PM