Moody’s recently revised Oman’s outlook to positive while affirming its Ba1 ratings. This positive change can be attributed to the country’s ongoing improvements in public debt and oil revenues, as well as the government’s commitment to a public debt management strategy that has led to a reduction in external debt risks. These efforts have resulted in an increase in fiscal strength and robust foreign-currency buffers.
The government of the Sultanate of Oman has taken measures that have enhanced its ability to confront shocks such as fluctuations in energy prices and rising interest rates. Moody’s agency noted that Oman was able to reduce public debt to about 36.5 percent of GDP by the end of 2023, with external debt at around 24 percent compared to over 50 percent in 2020. Additionally, by the end of July, the rate of total public debt had decreased to about 34 percent of GDP.
While there have been improvements, there are still financial, economic, and monetary risks surrounding Oman’s credit rating. These risks include the volatility of global oil and gas prices, which are affected by the prospects of global economic growth and could impact Oman’s ability to improve its indicators. Moody’s emphasized the importance of the continuation of government measures in managing financial obligations, reducing public debt levels, enhancing non-oil revenues, and transitioning towards clean energy revenues to further improve Oman’s credit rating.
Moody’s also highlighted the importance of increasing the government’s ability to address financial fluctuations by strengthening the state’s financial position and foreign exchange reserves. By enhancing economic and social indicators, Oman can further secure improvements in its credit rating. The agency has indicated that the potential for an improvement in the credit rating lies in the government’s ability to continue implementing successful financial strategies while diversifying revenue sources away from oil.
Overall, Moody’s positive revision of Oman’s outlook and affirmation of its Ba1 ratings signal promising developments in the country’s economic landscape. By focusing on reducing public debt levels, improving non-oil revenues, and enhancing overall financial stability, Oman is on a path towards securing a more favorable credit rating and attracting potential investors. The continued commitment to sound financial management and the implementation of strategic measures will be key in sustaining and further improving Oman’s credit rating in the future.
