Oman adopts measures to put brakes on soaring inflation |
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Staff Report |
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Muscat: The Central Bank of Oman (CBO) on Monday adopted a number of measures intended to put the brakes on soaring inflation that soared to 11.56 per cent in March. Key among these measures is a decision to cut the interest rate on new personal loans from 8.5 per cent to 8 per cent per annum in an effort "to reduce the interest burden on borrowers". Interest rates on personal loans were last reduced in March by a similar half a percentage point. At the same time, the apex bank decided to increase the ceiling on housing loans offered by commercial banks from 5 per cent to 10 per cent of the bank's total credit. Lending ratio Further, it announced a reduction in the lending ratio from 87.5 per cent to 82.5 per cent for a limited four-month period extending from August to Nov-ember. In addition, the percentage of cash reserves maintained by commercial banks against deposits held by the CBO was raised from 5 per cent to 8 per cent of total deposits. These latter measures are designed to soak up excess liquidity with banks with the ultimate objective of reining in inflationary trends. In the most significant of the decisions adopted by the CBO Board on Monday, all banks operating in the Sultanate will switch to a five-day week with effect from July 1. The working work will extend from Sunday to Thursday, with banks remaining closed on Fridays and Saturdays. This change brings the banking business week in Oman in line with similar five-day-week schedules adopted by banks in the other Gulf states. |
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