S&P upgrades Oman’s credit rating to ‘BB’ with stable outlook

Leading international rating agency S&P has upgraded the credit rating of the Sultanate of Oman from “BB-” to “BB” with a stable outlook, attributing this enhancement to the improved financial performance of the country.

The upgrade, announced on Saturday November 26, 2022, also cited improvements in Oman’s balance of payments, crediting various financial measures adopted by the government within the framework of the Mediumterm Fiscal Plan (MTFP), coupled with the rise in international oil prices.

According to S&P, Oman’s financial performance further improved during the current year. It cited the significant efforts made by the government to reduce public debt which is projected to decline to 44 per cent of GDP in 2022, down from 61 per cent in 2021.

At the same time, state revenues are anticipated to increase over the next two years, while the state’s general budget and current account will continue to achieve financial surpluses until 2024.

This will lead to a strengthening of the state’s financial reserves, and achieve a fiscal surplus of about 5.8 per cent of the GDP during this year.

This compares with a deficit of about 4.9 per cent and 16.2 per cent during the years 2021 and 2020, respectively.

Economic activity will be supported by an increase in hydrocarbon production, an improvement in investment rates, and the government’s provision of more supportive measures directed at society and the private sector, the agency said, noting GDP growth will reach approximately 4 per cent in 2022 and 3 per cent in 2023.

Non-oil activities will become the main engine of growth in the coming years, S&P said, with the sector growing from 1.8 per cent in 2022 to an average rate of about 2.5 per cent during the 2024-2025 period.

S&P also praised the tangible efforts made by the government towards enhancing the principle of transparency and disclosure of financial and monetary data and gross domestic product (GDP), through periodic bulletins.

It pointed out that Oman’s credit rating may continue to rise in the event that financial measures continue to strengthen the financial position of the state, particularly as the country directs more financial surpluses towards reducing public debt, and increasing financial flexibility to address any crises and unexpected shocks.

Standard & Poor’s has raised the credit rating of the Sultanate of Oman twice in the last 12 months, from a “B+” rating in October 2021 to “BB-” last April. It has now raised it again to become “BB” for this year 2022.