Oman sees number of bounced cheques increase by a third

The number of bounced cheques in Oman last year increased by nearly a third as the sultanate continued to weather tough economic conditions.

Times of Oman cited central bank figures as confirming there were 373,082 bounced cheques in the country last year, a 32 per cent increase on the 282,209 seen in 2015.

The central bank said insufficient funds was the reason for nearly 75 per cent of the bounced cheques, with closed or legally blocked accounts making up 9.79 per cent and encoding errors 4.05 per cent.

The increase in total bounced cheques meant that almost one in 10 (8.4 per cent) of all cheques issued in the country bounced last year from 6.9 per cent in 2015.

Oman has been among the hardest hit economies in the Gulf Cooperation Council by the fall in oil prices, which has eroded external reserves and tightened spending.

One side effect has been an exodus of foreign workers in some areas including mid and senior management due to delays to salaries and projects.

Read: Oman’s expat exodus expected to continue in 2017

Landlords in the country are also reported to be offering cuts to rents and shorter lease terms to attract tenants due to a decrease in demand.

Ratings agency S&P downgraded the country’s credit rating to junk in May as they country continues to undertake austerity measures to reduce its budget deficit including tax increases.

Government spending this year is projected to total OMR11.7bn ($30.4bn) and revenues OMR8.7bn, which would result in a deficit of OMR3bn.

Read: Oman increases income tax rate, removes exemption for small firms

Earlier this month, Oman raised $3.55bn from a group of Chinese financial institutions to help cover the deficit, bringing its total borrowing this year to more than $10bn.

Read: Oman signs $3.55bn loan with Chinese banks