Oman’s first ever Public Debt Law was promulgated last week and was made available to the public in the Official Gazette today. This new law mostly provides a general governance framework of how the government plans to make decisions regarding the management of public debt and introduces a limited set of actual controls on government debt.
The first key provision in the Publi Debt Law creates a new committee called the “Public Debt Management Committee” which will be responsible for developing the general framework of debt management. This framework will have to be approved by the Council of Ministers before it becomes effective.
The committee will be made up of representatives of the Ministry of Finance, the Ministry of Economy, CBO, the OIA, and two independent members. The committee has some additional interesting functions such as the mandate of verifying that the money obtained through public debt, including that obtained by government companies, is used for the purpose for which the government borrowing was made.
The law explicitly now gives the Ministry of Finance the exclusive right to issue public debt instruments, without having to abide by the provisions of the Securities Law.
Article 5 of the Public Debt Law limits the cases in which public debt instruments are issued to: (1) financing the deficit of the General Budget of the State, (2) supporting the balance of payments, (3) financing infrastructure projects and government development projects of priority, (4) restructuring public debt, (5) supporting the financial policies of the Central Bank of Oman and providing its needs relating to foreign currency reserves, (6) fulfilling government obligations at the lowest possible cost, and (7) providing the financing necessary to counter disasters and emergencies declared by the government. Issuing public debt instruments outside these cases requires the approval of the Council of Ministers.
The Public Debt Law has a specific provision relating to loans made by government owned companies, and explicitly states that OIA entities will be subject to the rules specified by the Executive Regulation of the Public Debt Law.
The Public Debt Law enters into force tomorrow. You can read it in full in English on the link below: