Oman lifted from junk status by S&P amid reforms

S&P Global Ratings has upgraded Oman’s long-term sovereign credit rating to ‘BBB-‘ from ‘BB+’, restoring the country to investment grade status.

The ‘BBB’ rating, which Oman has now achieved, signifies an adequate capacity to meet financial commitments and is the lowest rung on S&P’s investment-grade scale.

This upgrade reflects Oman’s commitment to deleveraging its balance sheet and advancing its structural reform agenda, according to S&P.

The ratings agency further highlighted that the Omani government is expected to move into a small net asset position by the end of 2024, a stark contrast to its 19 per cent net debt position in 2021.

S&P has also assigned Oman a stable outlook, balancing the benefits of fiscal reforms against the country’s vulnerability to oil price fluctuations.

The upgrade underscores the impact of Oman’s reforms, including cuts to subsidies, the introduction of VAT, and the mobilisation of non-hydrocarbon revenues.

Additionally, S&P raised Oman’s short-term credit rating to ‘A-3’ from ‘B’ and improved its transfer and convertibility assessment to ‘BBB’ from ‘BBB-‘.

In its latest report on Oman’s fiscal standing, S&P commended the government’s ongoing efforts to diversify the economy away from hydrocarbons and attract foreign direct investment through asset sales and economic liberalisation.

“The Omani government has taken significant steps to stabilise its public finances, reducing external debt and accumulating liquid assets,” S&P noted.

“This continued fiscal discipline, coupled with rising non-hydrocarbon revenues, places the country on a more stable financial footing, despite ongoing volatility in oil prices.”

Oman’s fiscal outlook remains closely tied to oil prices, but with the government’s continued efforts to diversify its revenue streams, S&P expects the country to maintain fiscal surpluses averaging 1.9 per cent of GDP over the next three years.

This fiscal stability will be key as Oman continues to reduce its debt and strengthen its economic resilience.

Other key credit ratings agencies still currently have Oman at non-investment grade. Fitch rates the country at ‘BB+’, while Moody’s has Oman at ‘Ba1’, which is also non-investment grade.

Oman welcomes upgrade

Ibtisam Al Farooji, Undersecretary of Investment Promotion at the Ministry of Commerce, Industry & Investment Promotion, welcomed the news.

“This upgrade is a testament to the strength of Oman’s investment environment and the significant reforms implemented by His Majesty’s government,” Al Farooji stated.

“It sends a clear message to global investors that Oman is an increasingly attractive destination for investment and business growth, particularly given our regional connectivity and strategic position in the GCC,” she added.