* Central bank chief says SMEs "critical" to tame
* Central bank to issue rules to help boost SME lending
* Bank lending hit 22-month low in February
By Martin Dokoupil
DUBAI, April 24 Oman's central bank plans to
issue rules to boost lending to small and medium-sized firms,
its chief said on Wednesday, in a new move to help bring
unemployment down in the sultanate.
Supporting smaller firms is a key part of the government's
economic policy for tackling unemployment in Oman, estimated at
more than 24 percent by the International Monetary Fund.
But bank lending growth in Oman hit a 22-month low of 10.9
percent in February, central bank data showed.
"Bankers will appreciate that growth of SMEs is critical to
alleviating the unemployment problem in Oman," Executive
President Hamood Sangour al-Zadjali told an annual bankers'
"I therefore urge the banking community to gear up their
infrastructure and tweak their policies to accelerate credit
flow to the SME sector in line with government policy," he said
in a speech published on the Central Bank of Oman's website.
"The CBO will issue appropriate regulations as and when
formal communication is received in this regard from the
government," Zadjali added.
Oman's consultative Shura Council approved in February a
much higher minimum wage and curbs on foreign labour to prevent
a repeat of 2011 protests against joblessness.
Expatriates, mostly from south or southeast Asia, make up
about 39 percent of Oman's population and mainly work in the
oil, construction and services industries, according to official
data from last year.
Zadjali said he was happy that the ratio of Omanis working
in the banking sector was rising. But he added: "I urge the
banking community to increase the Omanization level in the
higher and middle management cadre."
The small non-OPEC oil exporter is keen to move more people
into private sector jobs in preparation for an eventual fall in
oil revenue, seen as possible later this decade.
The Shura Council has set a target for the number of foreign
workers in Oman at 33 percent of the country's total population
to create what it called an employment balance, but it has not
given a time frame. It has not said how the number of foreign
workers will be cut.
The central bank has also set up a team to tackle a lack of
liquidity management tools available to the country's newly
established Islamic banks, Zadjali said.
"We are aware about the dearth of Islamic liquidity
management tools, which are required for the successful
liquidity management by our Islamic banks," he said.
"The CBO has constituted an internal task force to study the
matter and propose suitable solutions."
Oman's first full-fledged Islamic banks, Bank Nizwa
and Al Izz Islamic Bank, were established
late last year.
Zadjali told Reuters earlier this month that the central
bank has granted Islamic banks a one-year relaxation of rules on
the amount of foreign assets they can hold, to give time for
Islamic financial instruments to be developed domestically.