Oman’s fiscal future brightens as S&P boosts outlook to positive

Credit ratings agency S&P on Friday revised its outlook on Oman to positive from stable, citing the country’s strengthening fiscal position.

S&P also affirmed its rating for the country at ‘BB+/B’.

In January, Oman forecast a budget deficit of 640 million rials ($1.66bn) for 2024, swinging from a surplus in 2023 as lower oil production and prices weigh on public finances.

Like its oil and gas exporting neighbours, Oman is seeking to diversify its sources of income and economic sectors away from hydrocarbons, but remains largely reliant on oil revenue.

Oman‘s Vision 2040, an economic development plan launched in 2021, envisions the country cutting the share of the oil sector’s share of gross domestic product (GDP) to 16 per cent in 2030 and 8.4 per cent in 2040, down from 39 per cent in 2017.

“The government’s balance sheet will strengthen and the economic reform programme could lead to faster-than-expected deleveraging in many state-owned enterprises, without dampening economic growth outcomes,” S&P said in a statement.

The ratings agency expects Oman‘s real GDP to expand by about 2 per cent per year on average during the 2024-2027 period.

In September 2023, S&P upgraded Oman‘s credit rating to ‘BB+’ on firmer macroeconomic fundamentals.