S&P upgrades Oman’s Credit Rating to BB+, with Stable Outlook

Muscat: Standard and Poor’s (S&P) has upgraded the Sultanate of Oman’s credit rating to “BB+” with a stable outlook.

As a result of the improved resilience of the Omani economy in the face of external financial shocks thanks to the measures taken by the government to improve financial and economic indicators, reduce the state’s public debt, and continue to improve the prospects for the oil sector.

The agency said that it expects to achieve economic growth at an average rate of about 2 percent during the period 2023-2026, despite the slowdown in real GDP growth during the current year as a result of the voluntary reduction in oil production after the OPEC Plus agreement. The agency also expects the non-oil sector to grow by about 2 percent during the period 2024-2025.

The agency indicated achieving a financial surplus of about 1.8 percent of the gross domestic product during the year 2022 after about eight years of recording financial deficits, expecting to continue achieving a financial surplus of an average of 1.5 percent during the years 2023-2024.

The agency stated that high oil prices will contribute to achieving additional revenues and will enable the government to continue its efforts to exploit these revenues towards reducing public debt, expecting the rate of public debt as a percentage of gross domestic product to decline from about 40 percent in 2022 to 38 percent in 2023.

The agency said it expects Brent crude prices to average about US$83 per barrel in 2023 and US$85 per barrel during 2024 and subsequent years. The agency confirmed that the credit rating of the Sultanate of Oman may rise if the government continues to reduce the country’s external debt, which will lead to a decline in the cost of servicing public debt.

The agency praised the remarkable progress made by the government towards enhancing the principle of transparency and data disclosure, including publishing periodic data on the gross domestic product and international investment status of the Sultanate of Oman.

The agency added that the measures taken by the government within the framework of regulating and governance of government companies are achieving tangible results in terms of operating efficiency. And enhance the financial performance of these companies.

It is noteworthy that, during the past few days, Fitch Credit Rating Agency raised the credit rating of the Sultanate of Oman to “BB+” with a stable future outlook as a result of the government’s concrete efforts in continuing to control public spending, and exploiting additional oil revenues to reduce the state’s public debt and manage the lending portfolio.