Oman can be regional leader in sustainable green financing, official says

Muscat looks to reduce reliance on fossil fuels and attract foreign investment

The corniche in the Mutrah district of Muscat, the capital of Oman, in 2011. Silvia Razgova / The National

An Omani official on Tuesday said Muscat can become a leading player in sustainable green financing in the Gulf, as the country continues to make reforms as part of its Vision 2040 agenda.

Mahmood Al Aweini, Oman's Secretary General of the Ministry of Finance, said the country could become a leading player in the region because of actions it has already undertaken.

“We have the infrastructure and the potential, either from the talents or the regulation system, that could support that,” he said during a discussion at the Arab Gulf States Institute in Washington.

Oman launched its sustainable finance framework this year as it looks to support the economy by reducing reliance on fossil fuels and attracting foreign investment.

Mr Al Aweini said Oman so far has built about eight concession areas for hydrogen production and is attracting a “number of energy giants globally, not only in the region”.

He said the companies would soon make a final investment decision, “which will make a big difference if it happens”.

The Oman Investment Authority this year also launched a 2 billion Omani rial ($5.1 million) fund to spur investments in small and medium-sized enterprises, and in the private sector.

“That was very important sector for us, a very important sector for economic diversification,” Mr Al Aweini said.

He said the sultanate has worked to update the regulation framework, with a court system that would be an important change in attracting foreign direct investment.

Mr Al Aweini said Oman also wants to attract more innovation in the financial technology sector.

“The banking system and central bank of Oman has a huge mandate to drive that stability within the financial sector, but also to put it into international standards that can attract important players from the market overall," he said.

“We try to widen the level … of service these financial institutions can offer to the international players, so it can become easier for them to get in, as well as to improve the competitiveness of the sector itself. Because to make it sustainable, it has to be very competitive.”

Mr Al Aweini also said regional tension has added a new degree of difficulty in convincing potential investors of Oman's stability.

Oman counts neighbouring countries the UAE and Saudi Arabia as two of its largest export partners, while tension remains high in Yemen.

He said the current regional crisis could provide some opportunities for Oman to emerge as a stable source of foreign direct investment due to limited options globally and in the region.

Oman's economy is projected to grow 0.9 per cent this year, the International Monetary Fund reported in May, before increasing to 4.1 per cent in 2025. The IMF expects reforms made under Vision 2040, as well as a surge in oil prices, to contribute to boosting Muscat's gross domestic product.

Non-hydrocarbon-related growth is projected to increase to 2.6 per cent in 2024 and 3.2 per cent in 2025, while headline inflation decelerated, the IMF said.

The fund said geopolitical risks, an abrupt global slowdown and higher-for-longer global interest rates remain downside risks.