The government of Oman is working on an environmental, social and governance (ESG) framework which could allow the heavily indebted Gulf oil-producing country to widen its funding base, two sources familiar with the matter said, Trend reports with reference to Reuters.
The move comes as Oman works with the International Monetary Fund to develop a debt strategy after state coffers were hurt by low oil prices and the COVID-19 pandemic last year.
Work on developing an ESG framework is at its early stages, said one of the sources.
A second said that while it was not linked to specific debt issuance plans, it would prove useful to tap ESG-focused investors in future fundraising exercises.
The ministry of finance did not immediately respond to a comment request.
Since the oil price crash in 2014, Oman's debt to GDP ratio has jumped from 15% in 2015 to about 80% last year, while Oman's plans to diversify revenue away from oil and to reduce spending on its bloated public sector have lagged.
But the Sultanate has embarked on a raft of measures in the past year to fix its finances, including the introduction of a value-added tax.
This has helped it maintain access in the international debt markets and raise billions of dollars between loans and bonds this year despite a ballooning budget deficit.
The development of a sustainability framework comes amid growing awareness among international investors about ESG risks, and efforts in the oil-producing Gulf region to attract capital to low-carbon and environmentally sustainable investments.
Neighbouring United Arab Emirates this year announced sustainable finance guidelines, and sources told Reuters in July that Saudi Arabia's Public Investment Fund had asked banks to help it develop an ESG framework. read more
In its Vision 2040 - an economic development plan launched this year - Oman said it aims to be ranked among the top 20 countries in the global Environmental Performance Index by 2040.
It is currently ranked 110 out of 180 countries.