Construction firms may get some relief from banks
Oman’s construction sector, which has been facing challenges due economic slowdown and delay in payments since past few years, could breath a sigh of relief as the banks, on directions of the Central Bank of Oman (CBO), have decided to give some relaxations in loan repayments.
Speaking to Muscat Daily on the sidelines of a recently held event, H E Tahir bin Salim al Amri, executive president of the CBO said the issue of delay in payments for construction companies has been discussed at all levels and they are trying to find amicable solutions to the problem.
“As the banking regulator, we have been working with all stakeholders to see to what extent the issue involves banking sector, particularly in terms of delay in payments due to tight liquidity situation in the market,” H E Amri said. He explained, despite the fact that the issue is structurally not related to the banking sector, they are still looking at all aspects of what can be done.
“What we have done is that we allowed banks to give little extended dispensation for companies that have contracts or where banks knew that payments are due and chances are there that it (payments) may come in near future. So, we have increased the leeway period to 180 days without classifications with constant monitoring of the situation,” H E Amri said.
He, however, clarified that these facilities wouldn’t be available for the companies, which are facing management or administration related problems.
Oman’s construction sector has been facing problems for past few years as the fall in crude prices reduced government spending, and borrowings by the government to finance budgetary deficits resulted in delayed payments and a host of other problems.
H E Amri believes that the situation has gradually improved in the recent past as many contractors and subcontractors have received payments.
Shahswar al Balushi, CEO of Oman Society of Contractors, said though there has been some improvement in the situation, things are still difficult for most operators in the sector.
He said the CBO, Ministry of Finance and other stakeholders have discussed the issue of delay in payments and other disputes related to the payments a number of times. But the sector is still facing a number of issues, which need to be addressed.
“We have made many representations to the government and other agencies for the early resolution of the problem, but as the issue is very complex, there are a number of stakeholders involved, so it has become harder to solve the problem. Still we are hopeful, and trying our best to solve the issue,” Balushi said.