Fitch has affirmed the credit rating of the Sultanate of Oman at “BB+” with a stable outlook, citing the decline in public debt as a percentage of GDP and the positive impact of financial measures on public finances. The agency expects the country to achieve a fiscal surplus of 2.2 per cent of GDP in 2024 and 0.9 per cent in 2025, assuming that the average oil price reaches about US$80 per barrel in 2024 and US$70 per barrel in 2025. Fitch also expects the oil price break-even point in Oman to reach 65-70 US dollars per barrel.
The agency anticipates public debt as a percentage of GDP to decrease from 36.5 per cent at the end of 2023 to 32.4 per cent in 2024, and 31.9 per cent in 2025. This indicates that Oman will continue to repay some debts before their due date, benefiting from additional revenues due to high oil prices. Fitch expects the government to repay about US$2.9 billion of its foreign debt in the first half of 2024. Additionally, the agency forecasts GDP growth from 1.3 per cent in the non-oil sector in 2023 to 1.8 per cent in 2024, attributed to increased domestic consumption, foreign investment growth, and improvements in the tourism sector. Fitch expects the non-oil sector to grow to 2.8 per cent in 2025.
In its report, Fitch highlighted that Oman’s credit rating could potentially rise if financial control measures are sustained, public debt declines as a percentage of GDP, and non-oil revenues continue to grow. This positive outlook reflects the agency’s confidence in Oman’s ability to maintain fiscal discipline and effectively manage its debt levels. The projected growth in the non-oil sector also indicates diversification and resilience in the economy, which could contribute to a stronger credit profile for the country.
The affirmation of Oman’s credit rating by Fitch provides a boost of confidence in the country’s economic stability and financial management. This can have implications for investor sentiment and access to international capital markets, as a stable credit rating is often a key factor in attracting investment. With a favorable outlook for the non-oil sector and expectations of continued debt repayment and fiscal surplus, Oman is positioning itself as a promising destination for foreign investment and economic growth.
The expectation of continued debt reduction and fiscal surplus in Oman is a positive sign for the country’s economic prospects and long-term financial stability. As public debt decreases as a percentage of GDP and non-oil revenues grow, Oman is likely to attract more investors and strengthen its position in the global market. The positive outlook from Fitch underscores the country’s commitment to prudent financial management and sustainable economic growth, which bodes well for its future development and resilience in the face of external challenges.
Overall, the affirmation of Oman’s credit rating by Fitch reflects the country’s progress in managing its finances and building a stable economic foundation. With expectations of continued growth in the non-oil sector and efforts to reduce public debt, Oman is paving the way for sustained economic development and improved creditworthiness. By maintaining fiscal discipline and focusing on diversification, the Sultanate of Oman is well-positioned to attract investment, create jobs, and enhance the well-being of its citizens.
