Oman to divide sovereign wealth fund into local and foreign portfolios

Move expected to help sultanate achieve priorities set out in Oman’s Vision 2040 and help diversify economy

The new National Development and Generational portfolios will help Oman reach some of its Vision 2040 targets. Silvia Razgova / The National

Oman plans to split its sovereign wealth fund into two portfolios, with one managing local and the other focusing on foreign assets, in a bid to boost its economic growth.

The Oman Investment Authority will be split into the National Development Portfolio and the Generational Portfolio, Abdulsalam bin Muhammad Al-Murshidi, chairman of the authority, was quoted as saying by the state-run Oman News Agency.

The National Development Portfolio, which includes more than 160 domestic companies, will manage local assets. It will support the state's general budget through dividend distributions, privatisation proceeds and treasury management.

The second unit, the Generational Portfolio, consists of mainly foreign assets with the aim of "achieving the greatest returns for future generations", the state agency reported. It also oversees some local assets with various instruments, including public and private markets, in addition to property.

The authority seeks to achieve the priorities of Oman’s Vision 2040, in terms of economic diversification, empowering the private sector, attracting foreign investment and maintaining financial sustainability, said Hisham Al Shidi, director general of the economic diversification investments unit at the Oman Investment Authority.

The Oman Investment Authority was established in June 2020 to own and manage most of its assets. The fund is comparatively smaller than Saudi Arabia’s Public Investment Fund, the Abu Dhabi Investment Authority and the Kuwait Investment Authority.

Oman, one of 23 members of the Opec+ alliance, said it will use the surplus arising from higher oil prices to reduce fiscal deficit, minimise public debt and boost spending on development projects.

The sultanate recorded a 210 million Omani riyal ($546m) budget surplus at the end of February, compared with a 457m riyal deficit a year earlier, as oil prices nearly doubled, the Ministry of Finance said.

S&P Global Ratings upgraded Oman’s long-term foreign and local currency sovereign credit rating for the first time since 2007 to BB- from B+, citing higher oil prices, rising hydrocarbon production and the government’s fiscal reform programme. The credit rating agency also revised the Gulf country's outlook to stable.

A BB rating is a speculative grading that implies the issuer is less vulnerable in the near term.