MUSCAT: International credit rating agency, Standard & Poor’s (S&P), released yesterday its credit rating report for the Sultanate of Oman, which upgraded the credit rating to "BB +" with a stable outlook. This was a result of the improved resilience of the Omani economy to external financial shocks and the Government's actions to improve financial and economic indicators, reduce the State's public indebtedness and continue to improve prospects for the oil sector.
The agency said it expected economic growth at an average rate of about 2 per cent during 2023-2026 despite slowing real GDP growth during the current year as a result of the voluntary reduction in oil production after the Opec+ agreement, and the non-oil sector growth of about 2 per cent during 2024-2025.
The Agency noted a fiscal surplus of about 1.8 per cent of GDP during 2022 after almost eight years of fiscal deficits, with an average fiscal surplus of 1.5 per cent expected to continue in 2023-2024.
The Agency stated that high oil prices would contribute to additional revenues and enable the Government to continue its efforts to exploit these revenues towards reducing public debt, with the expectation that the public debt rate as a proportion of GDP would decline from about 40 per cent in 2022 to 38 per cent in 2023.
S&P said it expects Brent crude prices to average around $83 per barrel in 2023 and $85 per barrel in 2024 and subsequent years. The agency confirmed that the Sultanate of Oman's credit rating could rise should the Government continue to reduce the State's external debt, which would lead to a reduction in the cost of servicing public debt.
The Agency commended the remarkable progress made by the Government towards strengthening the principle of transparency and disclosure, including the publication of periodic data on Oman's gross domestic product (GDP) and international investment status. The Agency added that the actions taken by the Government within the framework of the regulation and governance of State companies yield tangible results in terms of operational efficiency and enhanced financial performance of these companies.
Recently, Fitch Credit Ratings has upgraded the Sultanate of Oman's credit rating to "BB +" with a stable outlook as a result of the government's tangible efforts to further control public spending and exploit additional oil revenues to reduce the state's public indebtedness and manage the lending portfolio. — ONA
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