Muscat: Standard & Poor's amends the outlook for the Sultanate of Oman to positive.
According to the credit rating report issued by the agency on the 31st of March 2023, this amendment came as a result of the initiatives and developmental measures undertaken by the Oman government in the financial and economic arenas. The report also mentions that the financial position of the Sultanate improved in a way that is better than what the agency expects.
A statement issued online by the Oman News Agency quoted, ”Standard & Poor's announced that the Sultanate of Oman's outlook has been revised to positive and the credit rating has been fixed at "BB", in light of the continued improvement in the country's financial performance.”
“This would strengthen the position of the local economy so that it is able to adapt to fluctuations in the oil markets,” the statement added
The agency, Standard & Poor's , stated that the government's efforts to improve financial performance and policies supporting economic growth. It was reflected in the reduction in the volume of public debt, the strong growth the current GDP is witnessing and the decline in total public debt as a percentage of GDP from more than 60% in 2021 to about 40% in 2022.
It pointed out that the Sultanate of Oman is determined to continue improving its financial and economic position. This will increase its flexibility in the face of fluctuations in oil prices.
The agency expects the public debt to decrease to about OMR 16.5 billion, which is 37% of the gross domestic product by the end of 2023. This note came as a result of the observation in decline in the public debt rate and the achievement of financial surpluses during the years 2023 and 2024. It will increase the fiscal space of the Sultanate of Oman.
In its report, Standard & Poor's also mentioned,”The government managed to rationalise public spending during the year 2022 AD, despite the increase in oil revenues. This is the result of the government's continued efforts to control public spending.”
The agency also expects the growth of the gross domestic product (at constant prices) at an average rate of about 2.5% during the period 2023-2026 and it expects that the average growth of the non-oil sector will reach about 3.5% during the period 2025-2026.
The report also indicated that the average price of Brent crude is expected to reach $90 per barrel in 2023, $80 per barrel in 2024 and $55 per barrel in 2025.
The report added that the credit rating of the Sultanate of Oman may witness further improvement during the coming period if the measures currently taken contribute to strengthening the financial position of the Sultanate of Oman, in light of the continued reduction in the public debt rate and the cost of servicing the lending portfolio.
At the end of its report, the agency warned that the credit rating may be affected in the event of lax implementation of financial measures or the occurrence of unexpected factors that lead to high levels of fiscal deficit, and the balance of payments is affected in a way that exceeds the Agency’s expectations.
It is worth noting that the government of the Sultanate of Oman managed to reduce the public debt to OMR 16.6 billion during the first quarter of this year.