The Sultanate of Oman’s financial landscape is showing positive momentum, with recent data from the Central Bank of Oman (CBO) revealing a significant expansion in the broad money supply. Reaching OMR26.4 billion by the end of November 2025, this 6.4% year-on-year growth signals increased liquidity and economic activity within the nation. This article delves into the details of this expansion, examining the contributing factors and the performance of both conventional and Islamic banking sectors.
Oman’s Broad Money Supply Growth: A Detailed Look
The increase in the broad money supply is driven by a combination of factors impacting both narrow and quasi-money components. Narrow money, encompassing readily available funds, experienced a robust 12.2% increase. Simultaneously, quasi-money – which includes savings deposits, time deposits, certificates of deposit, margin accounts, and foreign currency deposits – grew by 4.1%.
This indicates a growing confidence in the banking system and a willingness among individuals and businesses to deposit funds. Interestingly, cash in the public saw a modest rise of 1.9%, while demand deposits surged by 14.1%, suggesting a shift towards utilizing bank accounts for transactions. This trend is often linked to increased digital payment adoption and financial inclusion initiatives.
Breakdown of Monetary Components
Understanding the components of the broad money supply is crucial for interpreting the overall economic picture.
- Narrow Money: Primarily consists of currency in circulation and demand deposits. Its strong growth suggests increased transactional activity.
- Quasi-Money: Represents less liquid forms of money, indicating a willingness to save and invest for the future.
- Demand Deposits: Funds held in checking accounts, readily available for withdrawal. The substantial increase points to greater reliance on banking services.
Interest Rate Trends in Oman’s Banking Sector
Alongside the expansion of the money supply, interest rate movements provide further insight into the health of Oman’s financial system. The weighted average interest rate on Omani Rial deposits decreased from 2.733% in November 2024 to 2.498% in November 2025. Similarly, the weighted average interest rate on Omani Rial loans also saw a decline, moving from 5.667% to 5.446% during the same period.
This downward trend in interest rates is largely influenced by global monetary policies, particularly those of the US Federal Reserve. The average overnight interbank lending market rate also fell, decreasing to 3.917% from 4.563% in the previous year, mirroring the decline in repurchase operation rates. These lower rates aim to stimulate borrowing and investment, fostering economic growth. Analyzing Oman’s economic indicators alongside these rate changes provides a comprehensive view of the nation’s financial health.
The Rise of Islamic Banking in Oman
The Islamic banking sector in Oman continues to demonstrate significant growth. By the end of November 2025, the combined assets of Islamic banks and windows reached approximately OMR9.3 billion, representing 19.4% of the total banking sector assets. This marks a substantial 12.3% increase compared to the same period in 2024.
This growth is fueled by increasing demand for Sharia-compliant financial products and services. The total outstanding balance of financing provided by Islamic banking units increased by 10.3% to around OMR7.5 billion. Deposits held with Islamic banks and windows also experienced a healthy rise of 10.9%, reaching approximately OMR7.3 billion. This demonstrates a growing preference for Islamic finance among Omani citizens and residents. The expansion of financial services in Oman is clearly being driven, in part, by the success of Islamic banking.
Performance of Islamic Finance Units
The strong performance of Islamic banks and windows highlights their increasing importance within Oman’s financial ecosystem. Their growth contributes to greater financial inclusion and provides alternative financing options for businesses and individuals. This sector’s continued expansion is expected to play a vital role in Oman’s economic diversification efforts.
Conclusion: A Positive Outlook for Oman’s Financial Sector
The data released by the Central Bank of Oman paints a positive picture of the Sultanate’s financial health. The 6.4% growth in the broad money supply, coupled with declining interest rates and the robust performance of the Islamic banking sector, indicates a strengthening economy. These trends suggest increased liquidity, growing confidence in the banking system, and a diversification of financial services.
Looking ahead, continued monitoring of these key indicators – including Oman’s financial stability – will be crucial for policymakers and investors alike. Further analysis of these trends will help to inform strategic decisions and ensure sustainable economic growth for the Sultanate of Oman. We encourage readers to explore the Central Bank of Oman’s website for more detailed data and insights.
