MUSCAT – Oman’s financial system has remained resilient despite global headwinds and is well placed to withstand external shocks, the country’s central bank governor said.

“With inflationary pressures easing, major central banks have shifted toward a more accommodative stance, helping to reduce several vulnerabilities. Yet renewed geopolitical tensions, trade frictions and volatility in commodity and financial markets continue to pose challenges,” said His Excellency Ahmed Al Musalmi, Governor of the Central Bank of Oman (CBO), in the foreword to the latest Financial Stability Report.

Al Musalmi said Oman’s banks, households and businesses had successfully navigated the pandemic, rapid monetary tightening and a turbulent external environment over the past five years. “The banking sector remains well-capitalized and liquid, with profitability supporting organic growth. Asset quality has been maintained and both household and corporate balance sheets remain sound,” he noted.

He highlighted that while debt levels as a share of GDP had risen slightly, they remained broadly aligned with historical norms. Credit conditions were stable through 2024 and business credit demand was expected to remain robust into 2025.

The governor pointed to structural reforms that have strengthened fiscal fundamentals and restored investment-grade sovereign ratings from S&P and Moody’s. “The enactment of the new Banking Law and updated Central Bank statutes has modernized the financial framework, while the updated Bank Deposit Protection Law has further aligned Oman’s safety nets with global best practices,” he said.

Looking ahead, Al Musalmi said the CBO was issuing guidelines to encourage green finance, climate resilience and innovation through digital and open banking. “These frameworks are enhancing competition, efficiency and modernization of the sector,” he added.

He cautioned that Oman remained exposed to global risks. “These potential headwinds, whether from global slowdowns or heightened geopolitical tensions, are being met with foresight, adaptability and sound policy measures,” he said.

Stress tests confirm the sector is well-positioned to absorb macro-financial shocks, Al Musalmi added, underscoring confidence in the resilience of Oman’s financial system. “While global uncertainties persist, Oman’s financial sector is not only capable of weathering them, but also well-placed to actively support the nation’s growth trajectory and safeguard long-term stability,” he said.