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Oman to use budget surplus to repay nearly $3bn debt

A seller at a souq in Oman. The country has been given a stable outlook, thanks to the positive impact of budget reforms and falling debt Reuters
A seller at a souq in Oman. The country has been given a stable outlook, thanks to the positive impact of budget reforms and falling debt

Oman is expected to repay nearly $3 billion in external debt in the first half of 2024, driven by the budget surplus from high oil prices, Fitch Ratings said in a new report.

The resulting 10 percent decline in external debt from the end of 2023 is faster than forecast last September.

The rating agency affirmed the Gulf state’s long-term foreign-currency issuer default rating at “BB+” with a stable outlook, thanks to the positive impact of budget reforms and falling debt. 



The government’s debt/GDP ratio is projected to fall to 32 percent of GDP by the end of 2024 through to 2025, from 36 percent in 2023. 

However, budget surplus is projected to narrow to 2.2 percent of GDP in 2024 and nearly 1 percent in 2025 from 3.2 percent in 2023, assuming a Brent oil price of $80 and $70 per barrel, respectively. 

“We estimate Oman’s fiscal breakeven Brent oil price at $65-70 per barrel,” the report said.

Fitch expects Opec+ to unwind production quotas from the fourth quarter of 2024, which will mitigate part of Oman’s revenue loss from lower oil prices.

Overall hydrocarbon revenue is forecast to drop by 11 percent next year.

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