Standard & Poor’s Global Ratings (S&P) has reaffirmed the Sultanate of Oman’s long-term sovereign credit rating at ‘BBB-’ with a Stable Outlook, citing the government’s ongoing efforts to reduce public debt and the continued improvement in the State’s fiscal performance.
Last September, S&P had upgraded the country’s long-term foreign and local currency sovereign credit ratings from ‘BB+’ to ‘BBB-‘.
The agency confirmed that the Sultanate’s credit rating may witness further improvement over the next two years if the government continues to manage the country’s public finances as planned, including increasing non-oil revenues and improving the efficiency of public spending.
It noted that these measures are expected to continue to boost GDP growth, supported by continued growth in non-oil GDP, in addition to continuing measures aimed at promoting the establishment and growth of companies and projects that support economic diversification activities and operations, in addition to initiatives to develop the capital market sector.
The agency noted in its report that the Sultanate has made significant progress in recent years in addressing the structural challenges it faced, including the large deficit in the state’s general budget and balance of payments.
It expected Oman’s real GDP to grow by 2% in the next three years (2025-2028), while the net public debt is expected to decrease to an average of GDP by 1.5% between 2025-2028.
This is attributed, according to the agency, to the assumption that the average price of Brent crude will reach $70 per barrel over the next two years, compared to $81 per barrel in 2024, in addition to a decline in oil production due to the Sultanate of Oman’s commitment to voluntary cuts under the OPEC+ agreement.
The agency also expects the current account to record a financial surplus averaging 1.3% of GDP during the period 2025-2028, noting that Oman has been able to cover the large deficits.
Standard & Poor’s expected inflation rates to remain at moderate levels, averaging about 1.5% annually during the period 2025-2028, after reaching about 1% in 2024.
The agency said the success of the Sultanate’s efforts to reduce total public debt from 68% of GDP in 2020 to 36% in 2024.
It also expects highly liquid assets to remain close to 40% of GDP during the period 2025-2028.
Also, the agency commended the efforts made to develop the hydrogen production sector, in light of Oman’s intention to achieve carbon neutrality by 2050, which will enable the country to become one of the leading hydrogen exporters by 2030.
