“The local economy is in an excellent condition. We expect growth of 5 percent this year. Inflation is under control, somewhere between 3.5 to 4 percent,” the sultanate’s top banker told Reuters on the sidelines of a banking conference.
Oman, whose debt to GDP is forecast by the IMF to be the lowest in the Gulf at 3.2 percent this year, has only issued small amounts of development bonds in the past. Oman had a budget surplus of 1.08 billion rials in 2011.
The planned merger of HSBC Holdings’ operations in Oman with local lender Oman International Bank, which the central bank approved two weeks ago, was expected to close in two to three months, Zadjali said.
Separately, he added that Oman’s first fully-fledged Islamic bank will be operational in the second half of this year due to a delay in the banking law.
“One of them will be immediately operational in the second half of this year,” Zadjali said. “The delay is because we are still in the process of promulgating the banking law to cover Islamic banking,” he said, adding the legislation should be in place by June.
The tiny non-OPEC producer’s banking sector is expected to grow at least 10 percent this year, similar to last year's growth.
“The economy is doing well, oil prices are good and lending will increase,” Zadjali said.