Fitch Revises Oman’s Outlook from Stable to Positive, Affirms its Rating at “BB”


Muscat: Fitch Ratings has revised Oman’s outlook to positive from stable and affirmed the rating at ‘BB’, in a report issued today.

According to Fitch, the positive outlook reflects a significant reduction in Oman’s debt to GDP as a result of fiscal consolidation measures, high oil prices and the associated reduction of external liquidity risks.

The agency said that the measures taken by the government helped to contain public debt, stating that the debt to GDP fell from 61% at the end of 2021 to 40% at the end of 2022. Fitch now expects the public debt to decline to 37% at the end of 2024, compared to 48% previously projected by the agency in its report issued in August 2022. Fitch forecasts a budget surplus of 2.3% of GDP and 0.1% in 2023 and 2024, respectively.

Fitch also projects Oman’s fiscal breakeven oil price to decline from 77 US Dollars per barrel in 2022 to 67 US Dollars per barrel in 2025, in light of ongoing fiscal measures and the implementation of the Medium Term Fiscal Plan (MTFP). The agency expects non-oil sector growth of 2.3% in 2023, pointing out to the recovery of the construction sector after being affected by the COVID-19 pandemic.

The agency also projects non-oil revenue to rise from 5.2% of non-oil GDP in 2022 to 5.6% in 2024. Moreover, it assumes the average Brent oil price to fall to 85 US Dollars per barrel in 2023 and 75 US Dollars per barrel in 2024.

In its report, Fitch said that Oman’s Sovereign net foreign assets are expected to improve in 2023. It further added that investment in renewables and hydrogen sector are likely to support growth from 2024.

The agency indicated that Oman’s credit rating could be upgraded in case of medium-term stabilization of public debt and sovereign net foreign assets (as a percentage of GDP), as well as a continued decline in net external debt to GDP.

The positive outlook is a significant indicator of the Government performance. It helps to foster the investors’ confidence in the national economy and improve the creditworthiness. The credit ratings show the reliability of the Government to meet its obligations.

It is worth noting that S&P Global Ratings revised Oman’s outlook to positive and affirmed its ratings at”BB” in a report issued last month (March). It commended the efforts exerted by the Government towards fiscal and economic reforms. – ONA

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