Muscat: Standard and Poor's raised the credit rating of Oman to 'BB+"' with a stable outlook on the back of improved resilience of the economy.
In its latest report the global rating agency said, “Despite the external financial shocks Oman has taken measures to improve the financial and economic indicators, reduce the state’s public debt. The government also continues to improve the prospects for the oil sector.”
The agency further 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 gross domestic product (GDP) growth during the current year as a result of the voluntary reduction in oil production after the Organisation of Petroleum Exporting Countries (Opec) Plus agreement,” S&P said in its report.
“The agency also expects the non-oil sector to grow by about 2 percent during the period 2024-2025.”
The agency also indicated that Oman has been able to achieve a financial surplus of about 1.8 percent of the GDP during 2022 after about eight years of recording financial deficits. It expects Oman to continue achieving a financial surplus of an average of 1.5 percent during the years 2023-2024.
The rating agency further 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. “It expects 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 further said it that expects Brent crude prices to average about $83 per barrel in 2023 and $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.
S&P also 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 enhancing the financial performance of these companies.
During the past few days, Fitch Credit Rating Agency had also 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.