S&P raises Oman’s credit rating to BB-, with stable outlook

BUSINESS REPORTER

MUSCAT, APRIL 2

Leading international credit rating agency Standard & Poor’s (&P) has raised the credit rating for the Sultanate of Oman from ‘B+’ to ‘BB-‘ with a stable outlook. The upgrade – the first since 2015 – has been attributed to the country’s improved fiscal indicators and lower public debt risk.

S&P also cited measures adopted by the Omani government as part of the Medium-Term Fiscal Balance Plan, and the combination of buoyant international oil prices and improved oil output, for the upgrade.

According to the report published by S&P on Friday, the Sultanate of Oman is anticipated to achieve a fiscal surplus equivalent to 5.7 per cent of GDP this year, as opposed to a fiscal deficit estimated at 4.6 per cent of GDP in 2021.

Also notable is the government’s medium-term plan to reduce the country’s dependence on oil revenues, alongside measures to curb public spending and improve efficiency – initiatives that are projected to contribution to a significant reduction of public debt to about 49.6 per cent of GDP at the end of 2022, down from current level of about 65.1 per cent.

Real GDP is also projected to grow by about 3.9 per cent in 2022, the S&P report noted, adding that the government’s liquid assets remain strong and are estimated at 47 per cent of GDP in 2022.

S&P further noted that it expects the non-oil sector to be the main driver of growth over the next three years with average growth projected at 2.2 per cent annually in 2023-2025, compared to 1.8 per cent in 2022.

The Sultanate of Oman's credit rating could rise further in the coming period if economic growth and financial conditions improve markedly, or if foreign exchange reserves or foreign assets rise, which in turn would help to bolster the country’s fiscal situation, the agency said. (With inputs from ONA)