S&P affirms Oman’s credit rating at BB- with stable outlook

Strong growth: Average GDP growth rate at constant prices projected to reach about 2.2 per cent during the period 2023-2025

NEW YORK: Leading international ratings agency Standard & Poor’s has affirmed the Sultanate of Oman’s credit rating at (BB-) with a stable outlook, citing financial and economic initiatives and measures for sustainability, as well as improved oil prices.

The New York headquartered agency said in its report issued on October 1, 2022 that the financial measures taken by the government within the framework of the medium-term fiscal plan and the improvement in oil prices are expected to contribute to strengthening the financial position of the Sultanate of Oman for the current and next year. S&P Global expects oil prices to reach an average of about $100 per barrel during the current year and $85 per barrel in 2023.

The report noted that average oil prices are expected to decline from 2024 to approximately $55 per barrel on an annual basis, noting that the fall in oil prices will lead to burdens on public finances, and the Sultanate of Oman should be aware of this when developing its upcoming policies and procedures.

The agency stressed that the rise in production, oil prices and the increase in the frequency of investment projects contributed to the growth of the Omani economy, pointing to the growth of GDP at constant prices of 3 per cent in 2021, and its rise to about 3.9 per cent in 2022.

S&P said that the average GDP growth rate at constant prices will reach about 2.2 per cent during the period 2023-2025. It also expects the non-oil sector to grow by an average of 2 per cent during the period 2024-2025 compared to a growth of about 1.8 per cent in 2022.

Standard & Poor’s also notes that the government has benefited from higher oil revenues to reduce the size of public debt, bringing the public debt-to-GDP ratio to 63 per cent, down to 45 per cent in 2021 and 2022 respectively.

It pointed out that the credit rating of the Sultanate of Oman may rise during the coming period if the financial consolidation measures continue to strengthen the financial position and balance of payments of the Sultanate, as the 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 volume of net public debt beyond the expectations of S&P.

In April this year, Standard & Poor’s improved Oman’s rating from its previous rating of (B+) to become the rating index (BB-). — ONA