Oman has invited banks to submit proposals to help it raise funds through the sale of an international bond as the sultanate seeks to plug a budget deficit on the back of lower oil prices.

The country, which is not a member of Opec, could raise a dollar or an Islamic bond, according to the news agency Bloomberg, which cited people with the knowledge of the matter. The government is expected to receive responses from the banks this week.

The sale of bonds by Oman is the latest among the Gulf states, which rely heavily on the sale of crude for revenues. The price of oil is still 50 per cent below the mid-2014 peak and has dented the financial muscle of six GCC state which includes the world’s biggest oil exporter Saudi Arabia. Oman had sold $2.5bn worth of bonds in June 2015, its first such sale since 1997 and tapped the bonds for an additional $1.5bn later in September. It has also secured $1bn from the international loan market in January to help bolster its finances.

Oman could run a budget deficit of RO3bn ($7.8bn) in 2017, which is equivalent to 35 per cent of the government revenues and 12 per cent of the country’s GDP.

The expected deficit comes after a challenging 2016 for the Omani economy as oil revenues dwindle. The budgeted deficit for 2016 was RO3.3bn.

When releasing details of the budget, the Ministry of Finance said: “Oil prices remain at low levels and, therefore, 2016 budget lost more than 67 per cent of oil revenues, despite high production, compared to oil revenues recorded in 2014.”

The country plans to fund 84 per cent or RO2.5bn of the projected deficit with external and domestic borrowing. The finance ministry says external US-dollar borrowing includes issuance of international bonds, Islamic bonds, and syndicated loans. The rest of the deficit, estimated to be nearly RO500m, will be covered by drawing on reserves.

An official at the central bank said last month that Oman is planning to raise up to $2bn through bond sales this year, according to the Bloomberg report, which said calls to Oman’s Ministry of Finance weren’t immediately returned.