The International Monetary Fund (IMF) expects private sector credit growth to remain relatively steady over the next five years, lifting from six per cent in 2018 to 6.8 per cent in 2020.
The IMF has announced that forecasts for Oman’s banking industry look positive, citing high capitalisation, low non-performing loans as well as strong liquidity buffers.
In a statement, the IMF said that although private sector credit growth has slightly moderated and interest rates are likely to increase as US monetary policy normalisation continues, banks’ credit growth is expected to remain healthy.
In April, the Central Bank of Oman (CBO) eased the lending ratio requirements, a key driver of liquidity and credit growth.
The IMF said that the amount of capital required to be stipulated as a share of lending portfolios was lowered from 12 to 11 per cent, a move that could add around OMR 7.8 billion ($20.3 billion) of new liquidity to the market.
The move is expected to enable greater credit expansion, as it encourages banks to increasingly borrow from and lend to each other.