New York: Moody’s credit rating agency today issued its credit rating report on the Sultanate of Oman, in which it raised the credit rating level for the second time in a row from “Ba2” to “Ba1” and changed the future outlook from positive to stable.
The agency attributes this development in the classification to its expectations of a continued decline in public debt and improved indicators of the government’s ability to bear the burden of the state’s public debt, as a result of the efforts made by the government in exploiting additional revenues to pay off the public debt, in addition to controlling spending and improving financial revenues.
The agency said that improving financial policies and their effectiveness, and the government’s determination to reduce the state’s public debt, will contribute to strengthening the state’s financial position and the government’s flexibility and ability to confront possible future shocks, even if oil prices witness a decline in their levels.
The agency explained that the continuation of the corrective measures taken since 2020 AD and the government’s efforts made towards enhancing economic and financial diversification support the Sultanate of Oman’s trend towards reducing dependence on oil revenues. The agency expects that the average oil prices will reach about 80-85 US dollars per barrel during the period 2024-2025 AD before declining. Gradually between 55 and 75 US dollars per barrel over the medium term.
Based on these estimates, the agency expects the state’s public debt to decline to about 35 percent as a percentage of GDP during the next three years.
The agency also expects that the current account will continue to achieve a surplus during the next two years, 2024 and 2025.
The agency said that the state’s general budget will continue to achieve a financial surplus of about 3.5 percent of the gross domestic product during the current year after achieving a financial surplus of about 7.5 percent of the gross domestic product during the year 2022.
The agency also expects that the current account of the Sultanate of Oman will continue to achieve a financial surplus of about 2 percent during the year 2023, after recording a surplus of about 5 percent in 2022.
The agency said that green hydrogen projects in the Sultanate of Oman are likely to contribute to reducing credit risks arising from the carbon transition.
Global Bank also indicated that the credit rating may rise if the state’s public debt continues to decline and the non-oil revenue sector improves.
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