S&P Global Ratings revised Oman’s outlook to positive and affirmed its ratings at “BB”, in light of improving fiscal performance.

The agency said in its credit rating report on the Sultanate of Oman issued today, that the revised outlook came as a result of the reform measures undertaken by the government of the Sultanate of Oman in the financial and economic areas that may contribute to strengthening Oman’s fiscal position in a better way than the agency expects, adding a greater degree of resilience of the national economy against oil price shocks.

The agency pointed out that the government’s efforts to improve fiscal performance and policies supporting economic growth were reflected significantly in reducing public debt. It also highlighted the strong growth witnessed by the nominal GDP and the decline in total debt to GDP from more than 60 per cent in 2021 to about 40 per cent in 2022.

The agency added that the Sultanate of Oman is determined to continue improving its fiscal position, which will enhance its resilience against oil price volatility.

The agency expects that the public debt will decrease to about RO16.5bn, or 37 per cent of GDP, by the end of 2023. It pointed out that the decline in public debt and posting financial surplus during the years 2023 and 2024 will lead to an increase in the fiscal space of the Sultanate of Oman.

In its report, the agency said that the government managed to rationalise public spending during 2022, despite the increase in oil revenues, as a result of the government’s continued efforts to control public expenditure.

The agency also expects the growth of GDP (at constant prices) at an average rate of about 2.5 per cent during the period 2023-2026. It also expects that the average growth of the non-oil sector will reach about 3.5 per cent during the period 2025-2026.

In the report, the agency pointed out that the average price of Brent crude is expected to reach $90 per barrel in 2023, US$80 per barrel in 2024, and US$55 per barrel in 2025.

The report stated that the credit ratings of the Sultanate of Oman could be raised during the coming period if the ongoing reform measures further strengthen Oman’s fiscal position, in light of the continued reduction in government net debt and interest costs.

At the end of its report, the agency noted that the credit rating may be affected if fiscal reform implementation slows, or the occurrence of unexpected factors leading to larger fiscal deficits or a worse external position in a way that exceeds the agency’s expectations.

It is worth noting that the government of the Sultanate of Oman has managed to reduce the public debt to RO16.6bn during the first quarter of 2023.