Qatar gives Oman $1 billion cash injection to help sultanate amid financial crisis

Oman has announced that Qatar has made a $1 billion cash injection into its Central Bank as the sultanate struggles with a severe financial crisis, according to media reports on Wednesday.

The aid package is meant to help Oman cope with a double whammy of low oil prices and the coronavirus crisis, sources told The Financial Times.

Although the aid package of $1 billion will not help Oman sustain itself in the long term Muscat is expecting more financial assistance from Qatar.

"A billion isn't going to move the needle - they need to raise a lot more," one source told the financial daily.

Oman and Qatar both declined to comment on the issue.

The sultanate has been gripped by the succession of new Sultan Haithem Al-Said in January, after the death Sultan Qaboos.

Qaboos, who had ruled Oman since 1970, saw the sultanate maintain its neutrality through various regional strifes, most recently with the UAE-Saudi blockade of Qatar.

Oman refrained from joining the blockade and has continued to trade with Qatar throughout the dispute, and had its own issues with Abu Dhabi after a UAE spy ring was discovered in the sultanate.

Sultan Haitham has been under increasing pressure due to financial problems to move closer to economic powerhouses the UAE and Saudi Arabia according to some analysts.

Oman is considering possible financial assistance from Gulf states, after the sultanate's economy took a double battering this year from low oil prices and the coronavirus crisis, Reuters has reported.

Bond prospectus seen by the news agency on Monday indicated that the sultanate might seek support from wealthier Gulf neighbours to help it deal with a budget deficit.

"Whilst discussions in relation to financial support have commenced with certain other Gulf countries, such discussions are only in preliminary stages," the prospectus reads.

Oman has made cuts to government spending, is planning on issuing more dollar-denominated bonds, and will introduce VAT from next year, but might still have to seek outside assistance.

Last week, Oman saw its credit rating cut for a second time this year by S&P Global Ratings to B+.

Oman has introduced a range of measures to deal with the crisis such as the introduction of 5 percent VAT from next year and issuing bonds, but is thought to still need a big bail out from one or some of its neighbours.