Oman has regained its investment-grade credit status after nearly seven years, as Standard & Poor’s (S&P) raised the country’s rating to ‘BBB-’ from ‘BB+’ with a stable outlook. The upgrade reflects significant improvements in Oman’s financial performance, driven by a combination of economic reforms and higher oil prices.
S&P praised the government’s efforts to restore balance in its finances, noting that reforms and restructuring initiatives had helped address the fiscal challenges exacerbated by the sharp drop in oil prices and the COVID-19 pandemic. The medium-term financial plan, which focused on reducing public spending and increasing revenues, has resulted in financial surpluses and improved the country’s fiscal outlook.
The credit rating agency highlighted that higher global oil prices, alongside Oman’s prudent financial measures, had strengthened the country’s economic position, providing a cushion against future external shocks. S&P predicts that Oman will generate fiscal surpluses of around 1.9% between 2024 and 2027, assuming Brent crude prices average $80 per barrel from 2025. This would enable the government to continue reducing its public debt and bolstering its financial reserves.
Oman’s real GDP is forecast to grow by 2% annually over the next few years, driven by increased oil production. Non-oil sectors are also expected to benefit, with growth projected at approximately 2% per year. S&P noted that Oman’s current account is expected to maintain an average surplus of 1.2% of GDP during 2024-2027, reflecting the country’s improved financial health.
A key element of Oman’s recovery has been its commitment to reducing public debt. S&P forecasts that public debt will fall to 29% of GDP by 2027, while the country’s liquid assets are expected to remain at around 36% of GDP over the same period. Inflation is set to stay moderate, averaging 1.4% annually, following a low of 0.9% in 2023.
Oman’s private sector is also seeing growth, with credit expanding by 4.9% in 2023. Lending is expected to continue growing by 5%-6% annually, underpinned by favourable credit conditions. The country’s reforms have also improved governance within state-owned enterprises, leading to increased profitability and reduced debt levels. The establishment of the Oman Energy Development Company (EDO) and Integrated Gas Company (IGC) has also played a role in improving government finances by incorporating net revenues after oil and gas sector expenses.
Looking ahead, S&P indicated that Oman’s credit rating could improve further over the next two years if the government maintains its current fiscal discipline and continues to diversify the economy. A key focus will be on increasing non-oil revenues, improving the efficiency of public spending, and promoting economic diversification.
Commenting on the upgrade, Oman’s Minister of Finance, Sultan bin Salim Al Habsi, said the new rating reflects the government’s commitment to fiscal balance and financial sustainability. He added that the improvements were the result of comprehensive financial reforms, including the introduction of the Public Debt Law, which has strengthened governance and improved the investment environment.
The Minister emphasised that the government remains committed to using its financial surpluses to foster economic growth and social prosperity, in collaboration with private sector partners and civil society institutions.
