Upgrade follows improvement in the state’s financial performance and fall in public debt.
Muscat: Standard & Poor’s (S&P) has raised for the second time this year the Sultanate’s credit rating to BB with stable future outlook from BB- in April 2022 with stable future outlook.
The raising of the credit rating of Oman is due to the tangible improvement in the state’s financial performance coupled with the improvement in the balance of payments and the reduction in public debt against the gross domestic product (GDP).
This improvement was possible due to the implementation of actions taken to control the financial position and the increase in oil prices. Standard & Poor’s has also praised the government of Oman’s efforts aimed to boost transparency and disclosure of the financial statements and the details related to GDP.
The rating agency expects the actual GDP growth at 3.9 percent in 2022 and 3 percent in 2023. The non-oil sector is expected to grow by 1.8 percent in 2022 and by 2.5 percent average rate from 2024 to 2025. The oil price is expected to reach an average of $90 per barrel during 2023 and is expected to further decrease to $80 a barrel during 2024.
Aseel Mohammed Ridha Al Lawati, Director of Public Debt Unit at the Ministry of Finance said the raising of Oman’s credit rating is an indication of the improvement in the internal and external financial condition of the Sultanate as a result of the increase in the improvement of the financial performance of the State in terms of achievement of a surplus in the general budget and in the balance of payments with the Central Bank of Oman (CBO) as a result of the increase in oil price and the increase in production.
She also pointed to the decrease in the public debt due to the additional repayment of debts and employment of part of the surplus in the general budget of the state for this purpose. Referring to the criteria of Standard & Poor’s in credit rating of countries, she said the analysts of the credit rating agencies do carry out analysis and review of the economic and financial data of the state which covers the main sectors and thereby arrive at decision taking.
Credit rating agencies also review the diversification of sources of income, financial and liquidity performance among other aspects, she added.
The improvement in the Sultanate’s financial performance has been achieved through many factors including the increase in oil price and implementation of the government actions, she said, pointing to the Mid-Term Financial Plan (MTFP) for improvement of the financial performance.
She said the increase in oil price has led to the achievement of a surplus and the increase in payments. The surplus is used in reduction of the public debt as one of the priorities of the government, she added, pointing that the net debt has been reduced by OMR2.60 billion at the end of September 2022.
She said the improvement of the Sultanate’s credit rating would reflect on the confidence of investors in the local economy which will in turn attract investments to the Sultanate and would increase the number of investors and finance providers.
Speaking on future expectations, she said the expectations include reduction of the debt against the GDP to reach 40 percent at the end of the current year compared to 60 percent in 2021.
Besides, the GDP growth is expected to be 3.9 percent during the current year, she added.
