MUSCAT, DEC 20
The Sultanate of Oman stands on the cusp of a potential sovereign credit upgrade after being upgraded for two consecutive years. The nation's remarkable progress, coupled with rising tax revenue as a percentage of GDP, has garnered the attention of global investors and sparked optimism for future economic growth.
Moody's and S&P Global are keeping a close watch on Oman's performance, with a potential investment-grade status being highly anticipated.
Earlier this month, Moody’s has raised Oman’s credit rating for the second time in a row to Ba1 with a revised outlook from ‘positive’ to ‘stable’.
Such an upgrade would serve as an invitation for giant pension funds and global fixed income indexes to include Omani bonds in their portfolios, potentially leading to an estimated $3 billion of inflows and a reduction in borrowing costs.
Underpinning this positive outlook is Oman's commitment to economic stability and diversification. With the government's consistent efforts to reduce exposure to oil price volatility, Oman has strategically focused on increasing tax revenue as a percentage of GDP. The country has demonstrated a commendable effort to build a more resilient and stable economy.
Oman's pursuit of economic diversification has yielded positive results, spurring the confidence of credit rating agencies. In a report by Reuters, S&P's Frank Gill acknowledged the notable progress Oman has made in terms of tax revenue. This growing stability, combined with the country's broader strengths, signifies the potential for further economic expansion.
The potential credit rating upgrade holds profound implications for Oman's economy, including the prospects of reduced borrowing costs and increased opportunities for growth. The inflow of substantial investment from global pension funds would provide the country with additional resources for infrastructure development, job creation, and enhanced business prospects.
Oman's successful track record in bolstering its economy and diversifying away from its reliance on oil revenues has become a key factor in the nation's upward trajectory. Recognising the importance of a diverse economy, Oman's efforts to attract foreign investors and stimulate economic growth have gained momentum.
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