Standard & Poor's raises forecast for Oman

S&P revises Oman's outlook to positive

30 March 2024

Standard & Poor (S&P) issued its first credit rating report for Oman in 2024 in which it modified its future outlook from stable to positive and affirmed its credit rating level at ‘BB+/B'.

According to the agency, this is due to the continuous improvement in the Sultanate's public financial performance indicators and the achievement of financial surpluses in addition to government efforts to reduce net public debt.

The agency report says that Oman is returning to financial surpluses after seven years of deficits thanks to government measures to control public spending and increase non-oil revenues in addition to positive results from the restructuring of government companies.

The agency said the average financial surplus in Oman's general budget was expected to reach about 2.6 percent of Gross Domestic Product (GDP) during 2023 and about 1.2 percent from 2024 to 2027. It said that in addition to achieving a financial surplus in the external (current) account of about 2 percent in 2023, Oman is expected to achieve an average surplus of 1.2 percent from 2024-2027.

The agency predicts that the average price of Brent crude oil will reach about $85 per barrel in 2024 and $80 per barrel from 2025-2027.

The agency also expects Oman's public debt rate to decline from 36 percent in 2023 to about 31 percent of GDP in 2027.

The agency says real GDP growth is expected to rise from 1.6 percent in 2023 to 2 percent on an annual basis during the period 2024-2027, noting that the non-oil sector will see growth of about 2 percent.

The report says inflation in 2023 was about 0.9 percent and will remain moderate at an average of 1.5 percent on an annual basis during the period 2024-2027 due to government measures.

The agency said that the government's continued implementation of measures aimed at strengthening the financial position and improving its indicators, in addition to economic measures that contribute to economic growth and the continued reduction of the state's public debt, will lead to an improvement in the credit rating.