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Middle East and Central Asia > Oman

You are looking at 1 - 10 of 14 items for :

  • Type: Journal Issue x
  • Monetary Policy, Central Banking, and the Supply of Money and Credit: General x
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Cover Selected Issues Papers
Monetary Policy Transmission in Oman
Thomas Kroen
Amid a pegged exchange rate to the US dollar and an open capital account, Oman’s policy rates move closely with US monetary policy. In this analysis, we show empirically that transmission from policy rates into effective lending and deposit rates remains subdued in Oman, even compared to GCC peers that similarly face a high oil price environment with persistent excess liquidity in the banking system. A cap on personal loan rates and low exposure of banks to SMEs and riskier borrowers limit passthrough into effective lending rates and credit conditions. The note documents ongoing actions by Omani policymakers to strengthen transmission and provides further recommendations on liquidity management, reserve management, and relaxing the interest rate cap.
Keywords:
monetary policy transmission; Oman's policy rates move; Fed policy rate hike; transmission from policy; credit growth; Deposit rates; Credit; Central bank policy rate; Excess liquidity; Interest rate ceilings
Cover IMF Working Papers
How Persistent are Climate-Related Price Shocks? Implications for Monetary Policy
Alain N. Kabundi
,
Mr. Montfort Mlachila
, and
Jiaxiong Yao
Climate change is likely to lead to more frequent and more severe supply and demand shocks that will present a challenge to monetary policy formulation. The main objective of the paper is to investigate how climate shocks affect consumer prices in a broad range of countries over a long period using local projection methods. It finds that the impact of climate shocks on inflation depends on the type and intensity of shocks, country income level, and monetary policy regime. Specifically, droughts tend to have the highest overall positive impact on inflation, reflecting rising food prices. Interestingly, floods tend to have a dampening impact on inflation, pointing to the predominance of demand shocks in this case. Over the long run, the dominant monetary policy paradigm of flexible inflation targeting faced with supply-induced climate shocks may become increasingly ineffective, especially in LIDCs. More research is needed to find viable alternative monetary policy frameworks.
Keywords:
climate change; monetary policy; monetary policy models; food price inflation drought; monetary policy paradigm; supply and demand shock; IMF working paper 22/207; IT country; Natural disasters; Inflation; Monetary policy frameworks; Global; Caribbean
Cover Departmental Papers
Assessing Banking Sector Vulnerabilities in the Gulf Cooperation Council in the Wake of COVID-19
Abdullah Al-Hassan
,
Imen Benmohamed
,
Aidyn Bibolov
,
Giovanni Ugazio
, and
Ms. Tian Zhang
The Gulf Cooperation Council region faced a significant economic toll from the COVID-19 pandemic and oil price shocks in 2020. Policymakers responded to the pandemic with decisive and broad measures to support households and businesses and mitigate the long-term impact on the economy. Financial vulnerabilities have been generally contained, reflecting ongoing policy support and the rebound in economic activity and oil prices, as well as banks entering the COVID-19 crisis with strong capital, liquidity, and profitability. The banking systems remained well-capitalized, but profitability and asset quality were adversely affected. Ongoing COVID-19 policy support could also obscure deterioration in asset quality. Policymakers need to continue to strike a balance between supporting recovery and mitigating risks to financial stability, including ensuring that banks’ buffers are adequate to withstand prolonged pandemic and withdrawal of COVID-related policy support measures. Addressing data gaps would help policymakers to further assess vulnerabilities and mitigate sectoral risks.
Keywords:
COVID-19; banking performance; corporates performance; sovereign-banks-economy nexus; bank asset quality; oil price shock; policy support; assessing banking sector vulnerability; C. bank assets quality; Financial statements; Commercial banks; Loans; Credit; Global; Middle East
Cover IMF Working Papers
The Impact of Oil Prices on the Banking System in the GCC
Padamja Khandelwal
,
Mr. Ken Miyajima
, and
Mr. Andre O Santos
This paper examines the links between global oil price movements and macroeconomic and financial developments in the GCC. Using a range of multivariate panel approaches, including a panel vector autoregression approach, it finds strong empirical evidence of feedback loops between oil price movements, bank balance sheets, and asset prices. Empirical evidence also suggests that bank capital and provisioning have behaved countercyclically through the cycle.
Keywords:
WP; NPL ratio; oil price; price growth; GCC bank; Macro-financial linkages; nonperforming loans; panel vector autoregression; asset price appreciation; bank asset quality; Oil prices; Credit; Financial cycles; Capital adequacy requirements; Global
Cover IMF Working Papers
Measuring Concentration Risk - A Partial Portfolio Approach
Pierpaolo Grippa
and
Lucyna Gornicka
Concentration risk is an important feature of many banking sectors, especially in emerging and small economies. Under the Basel Framework, Pillar 1 capital requirements for credit risk do not cover concentration risk, and those calculated under the Internal Ratings Based (IRB) approach explicitly exclude it. Banks are expected to compensate for this by autonomously estimating and setting aside appropriate capital buffers, which supervisors are required to assess and possibly challenge within the Pillar 2 process. Inadequate reflection of this risk can lead to insufficient capital levels even when the capital ratios seem high. We propose a flexible technique, based on a combination of “full” credit portfolio modeling and asymptotic results, to calculate capital requirements for name and sector concentration risk in banks’ portfolios. The proposed approach lends itself to be used in bilateral surveillance, as a potential area for technical assistance on banking supervision, and as a policy tool to gauge the degree of concentration risk in different banking systems.
Keywords:
WP; risk factor; concentration risk; Basel capital requirements; Pillar 2; Credit VaR; capital charge; bank portfolio; asset correlation; Basel capital framework; requirement formula; Credit risk; Credit; Asset valuation; Basel II; Vector autoregression; Global
Cover IMF Working Papers
Inflation Differentials in the GCC: Does the Oil Cycle Matter?
Mr. Oral Williams
and
Mr. Kamiar Mohaddes
This paper uses a pairwise approach to investigate the main factors that have been driving inflation differentials in the Gulf Cooperation Council (GCC) region for the past two decades. The results suggest that inflation differentials in the GCC are largely influenced by the oil cycle, mainly through the credit and fiscal channels. This implies that closer coordination of fiscal policies will be key for facilitating the closer integration of the GCC economies and ahead of the move to a monetary union. The results also indicate that after controlling for cyclical factors, convergence increased even during the recent oil boom.
Keywords:
WP; inflation differential; Inflation differentials; convergence; oil prices; panel data; pairwise approach; monetary union; Gulf Cooperation Council (GCC) countries.; credit growth differential; GCC inflation rates; weight differential; GCC country; Pairwise differential; differentials in the GCC; country inflation equation; oil revenue differential; inflation gap; government expenditure growth differential; rent weight differential; Inflation; Fiscal stance; Nominal effective exchange rate; Credit; Consumer price indexes; North Africa; Europe; Asia and Pacific
Cover Departmental Papers
Gulf Cooperation Council Countries (GCC): Enhancing Economic Outcomes in an Uncertain Global Economy
Samya Beidas-Strom
,
Mr. Tobias N. Rasmussen
, and
Mr. David Robinson
Departmental papers are usually focused on a specific economic topic, country, or region. They are prepared in a timely way to support the outreach needs of the IMF’s area and functional departments.
Keywords:
DPPP; DP; GCC country; real GDP; financial crisis; monetary policy; fiscal policy; Consumption; Oil prices; Credit default swap; Employment; Global; Asia and Pacific; Middle East
Cover IMF Working Papers
Nonperforming Loans in the GCC Banking System and their Macroeconomic Effects
Mr. Raphael A Espinoza
and
Mr. Ananthakrishnan Prasad
According to a dynamic panel estimated over 1995 - 2008 on around 80 banks in the GCC region, the NPL ratio worsens as economic growth becomes lower and interest rates and risk aversion increase. Our model implies that the cumulative effect of macroeconomic shocks over a three year horizon is indeed large. Firm-specific factors related to risk-taking and efficiency are also related to future NPLs. The paper finally investigates the feedback effect of increasing NPLs on growth using a VAR model. According to the panel VAR, there could be a strong, albeit short-lived feedback effect from losses in banks’ balance sheets on economic activity, with a semi-elasticity of around 0.4.
Keywords:
WP; bank; interest rate; NPL ratio; loan; GCC country; NPLs; macro-financial linkages; Gulf Cooperation Council; Stress-testing; banking system; GCC economy; bank Muscat SAOG; feedback effect; banks in the Gulf Cooperative Council; GCC countries data; balance sheet constraint; GCC region; Nonperforming loans; Credit; Commercial banks; Credit risk; Loans; Global
Cover Departmental Papers
Impact of the Global Financial Crisis on the Gulf Cooperation Council Countries and Challenges Ahead: An Update
Ms. May Y Khamis
and
Mr. Abdelhak S Senhadji
Departmental papers are usually focused on a specific economic topic, country, or region. They are prepared in a timely way to support the outreach needs of the IMF’s area and functional departments.
Keywords:
DPPP; DP; GCC; GCC country; asset; debt; financing; GCC policymaker; GCC corporate; GCC government; GCC market; GCC sovereign; Credit; Credit default swap; Bank credit; Stock markets; Global
Cover Departmental Papers
Impact of the Global Financial Crisis on the Gulf Cooperation Council Countries and Challenges Ahead.
Ms. May Y Khamis
,
Mr. Abdelhak S Senhadji
,
Mr. Gabriel Sensenbrenner
,
Mr. Francis Y Kumah
,
Maher Hasan
, and
Mr. Ananthakrishnan Prasad
This paper focuses on impact of the global financial crisis on the Gulf Cooperation Council (GCC) Countries and challenges ahead. The oil price boom led to large fiscal and external balance surpluses in the GCC countries. However, it also generated domestic imbalances that began to unravel with the onset of the global credit squeeze. As the global deleveraging process took hold, and oil prices and production fell, the GCC’s external and fiscal surpluses declined markedly, stock and real estate markets plunged, credit default swap spreads on sovereign debt widened, and external funding for the financial and corporate sectors tightened. In order to offset the shocks brought on by the crisis, governments—buttressed by strong international reserve positions—maintained high levels of spending and introduced exceptional financial measures, including capital and liquidity injections. The immediate priority is to complete the clean-up of bank balance sheets and the restructuring of the nonbanking sector in some countries. Clear communication by the authorities would help implementation, ease investor uncertainty, and reduce speculation and market volatility.
Keywords:
DPPP; DP; banking sector; GCC country; credit bureau; GCC bank; investment funds; economic activity; U.S. dollar; Commercial banks; Credit; Islamic banking; Stock markets; Liquidity; Global; Middle East; North Africa; South Asia