S&P revises Oman’s outlook to positive

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Global rating agency S&P has revised its outlook on Oman to “positive” from “stable”, driven by the government’s strong fiscal position.

The revision was further supported by expectations that the economic reform programme in the sultanate would lead to faster-than-expected deleveraging in many state-owned enterprises, without dampening economic growth. This will strengthen the economy’s resilience to adverse oil price shocks.

S&P affirmed its rating of “BB+/B” long- and short-term foreign and local currency sovereign credit ratings on Oman.

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“The ratings could be raised over the next 18 months if Oman’s fiscal position strengthens further from a continued reduction in government debt and the state-owned enterprise sector’s continued deleveraging,” the ratings agency said.

The government is well placed to continue reducing external debt or accumulate assets as the budget surpluses are forecast to average 1.2 percent of GDP over 2024-2027.

S&P expects the Brent oil price to average $85 per barrel in 2024 before modestly decreasing to $80 through 2027.

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The government’s fiscal and economic reform momentum will continue over the 2024-2027 period.

“We forecast real GDP will expand by about two percent per year on average over 2024-2027,” S&P added.

Oman’s budget surplus reached nearly a quarter of a billion dollars in January, helped by public income from state investments, according to its state-owned news agency. 

The surplus was OR85 million ($220 million) by the end of January, down just over 40 percent on the OR145 million surplus registered in the same month of 2023.