Oman is most likely to face a “forced currency devaluation” in coming years due weak oil prices and low financial buffers, according to a new report. In its report issued on Wednesday, BMI Research, a Fitch Group Company, said that the “probability of such a move is rising.” Oman’s crude oil price have declined to USD45.9 per barrel driven by weakness in global energy markets since early-2017, thus exacerbating the vulnerabilities due to its modest financial buffers and brining concerns over the sustainability of the Rial’s peg to the dollar, the report said. “A reluctance to hike interest rates amidst slowing economic growth, and weaker political ties with the rest of the Gulf than its neighbours, provide additional reasons to be cautious about the currency peg,” BMI said. It expects Oman's budget deficit to reach 12.2% of GDP this year, with the current account shortfall of 8.0% of GDP.
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