Arab News, Mon, Apr 01, 2024 | Ramadan 22, 1445
S&P revises Oman’s outlook to positive; affirms credit rating ‘BB+/B’
Oman:
Oman’s improved fiscal position prompted international credit rating agency S&P
Global to upgrade the country’s outlook from stable to positive.
It also affirmed the long- and short-term foreign
and local currency sovereign credit ratings at “BB+/B,” according to a press
release.
This comes as the agency believes that the Oman
government’s fiscal and economic reforms, particularly those targeting
operational efficiencies and stronger financial profiles for state-owned
enterprises, will continue.
Additionally, the positive outlook reflects S&P’s
view that this would strengthen the economy’s resilience to adverse oil price
shocks.
“The government’s balance sheet will strengthen,
and the economic reform program could lead to faster-than-expected deleveraging
in many state-owned enterprises, without dampening economic growth outcomes,”
the agency stated in a statement.
It added: “We expect the government’s fiscal and
economic reform momentum will continue over 2024-2027.”
The rating agency also anticipates Oman’s real
gross domestic product to grow by approximately 2 percent annually on average
from 2024 to 2027.
Furthermore, S&P projects that Oman’s foreign
policy is expected to maintain a broadly neutral stance, with minimal spillover
effects on the country in the event of regional geopolitical conflicts.
In January, Oman forecasted a budget deficit of
640 million rials ($1.66 billion) for 2024, a reversal from a surplus in 2023,
attributed to lower oil production and prices impacting public finances.
Similar to its Gulf oil and gas exporting
counterparts, Oman aims to diversify its income sources and economic sectors
away from hydrocarbons. However, it remains predominantly reliant on oil
revenue.
In December 2023, further enhancements in Oman’s
debt burden prompted US-based Moody’s Investors Service to upgrade its credit
rating for the second consecutive time last year, elevating it from “Ba2” to
“Ba1.”
The upgrade in rating at the time was attributed
to improvements in debt affordability metrics, as stated in a press release.
This positive shift, reported at the time,
primarily resulted from spending restraints and the utilization of additional
revenues to reduce public debt.
In September 2023, S&P upgraded Oman’s credit
rating from “BB” to “BB+” on account of firmer macroeconomic fundamentals.