S&P revises rating for Oman economy

Standard and Poor has released the latest and revised credit rating report for the Sultanate of Oman. In the revised rating, S&P has given “BB+” rating to Oman.

The rating agency appreciated the measures and regulations of the Oman government. Similarly, a few days ago,Fitch Credit Rating Agency also raised the credit rating of the Sultanate of Oman to “BB+”.

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The revision resulted from the strong resilience of the Omani economy in the face of external financial shocks, measures taken by the government to enhance financial and economic indicators, reductions of the state’s public debt, and continued improved prospects of the oil sector.

The S&P agency added that it is expecting Oman will achieve economic growth at an average rate of about 2% within 2023-2026.This came despite the slowdown in real GDP growth during the current year due to a reduction in oil production after the agreement called OPEC plus.

The rating agency is also expecting the growth of the non-oil sector by about 2 per cent. During the period of 2024-2025.

It also indicated achiement of  financial surplus of about 1.8 per cent of gross domestic production in the last year of 2022.

According to rating ageny That surplus of 2022 came after nearly eight years of recording financial deficient and expecting to continue achieving a financial surplus.

According to rating agencies, the high prices of oil would contribute to achieving additional income and will encourage the government to make more efforts to exploit these revenues to reduce public debt.

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Standard and Poor expects crude prices will remain at an average of US$83 per barrel in 2023 and US$85 per barrel during 2024 and subsequent years.

The agency also confirmed that the rating agency might raise the credit rating of the Sultanate of Oman in future if the government continue to reduce the external debt of the country, and it will ultimately lead to a decline in the cost of servicing public debt.

The agency praised the remarkable growth achieved by the government to enhance the principle of transparency and data dissemination, including publishing periodic data on gross domestic production and international investment status of the Sultanate of Oman.

Fitch rated Oman with BB+ with a stable future outlook as result of  concrete efforts by the government to control public spending and exploiting additional oil revenues to reduce the public debt of the state and manage the lending portfolio.

 

Tariq Saeed

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