Fitch Ratings revises outlook for Oman to ‘Positive'

Fitch Ratings released its latest credit report on Oman, revising the Sultanate's outlook from stable to positive.  It confirms Oman's credit rating at BB+.

The upgrade in outlook reflects ongoing government measures to reduce public debt and the debt of state-owned enterprises, maintain fiscal discipline, and increase net sovereign foreign assets.

The agency expects Oman to achieve a fiscal surplus of 2% of GDP in 2024, declining to 0.7% in 2025, and potentially turning into a fiscal deficit of 0.2% in 2026.

These projections are based on Brent crude oil prices averaging $70 per barrel in 2025 and $65 per barrel in 2026, with the fiscal breakeven oil price estimated between $67 and $70 per barrel.

Fitch noted that Oman’s non-oil primary balance is expected to improve gradually due to controlled spending and more efficient tax collection. The non-oil primary deficit as a percentage of non-oil GDP is projected to decrease from 43% in 2020 to 27% in 2024 and to 24% by 2026.

The report forecasts GDP growth of 1.8% in 2024, supported by a 3.7% increase in the non-oil sector. Factors such as rising domestic consumption, foreign investment growth, and an improved tourism sector are expected to drive the non-oil sector’s growth to more than 3% in 2025 and 2026.

Fitch also anticipates a decline in public debt as a percentage of GDP from 37.5% in 2023 to 34% in 2024, reaching 33.3% by 2026.

External debt is expected to decrease by $2.8 billion in 2024, bringing it to around $26.6 billion. Oman’s net sovereign foreign asset position is projected to rise to about 10% of GDP in 2024, compared to -9% of GDP in 2020.

The agency says that Oman’s credit rating could be upgraded if fiscal consolidation efforts continue, public debt as a percentage of GDP decreases further, non-oil revenues grow, and foreign currency reserves increase.