The Sultanate of Oman and its government are known for making decisions and policies that are for the long-term benefits and for the generations to follow.
The period between the end of 2014 and 2021 was very challenging for everyone in the Sultanate of Oman, especially for policymakers, because of the low crude prices for an extended period.
Things got bad towards the first quarter of 2020 when oil prices dropped to single digits.
While it did make a gradual comeback, the subsequent measures to limit the spread of the Covid-19 pandemic hampered the recovery with extended lockdowns and shutdowns.
Realising the consequences of full dependence on revenues from the oil and gas sector, the Medium-Term Fiscal Plan (MTFP) (2020-2024) was launched with a set of measures and initiatives aiming at achieving fiscal sustainability while maintaining an attractive investment climate.
As we come close to the end of MTFP, we can rightly claim its outcomes have been encouraging though some results may take a couple of years to be visible and felt on the ground or impact our daily lives.
One positive indicator is the last week's Moody's Ratings which changed the outlook on the Government of Oman to positive from stable and affirmed its Ba1 long-term issuer and long-term senior unsecured ratings.
It also affirmed the Government of Oman's (P) Ba1 senior unsecured medium-term note programme rating.
The agency said that the key driver for the change of the outlook to positive is the ongoing improvements in the government's debt metrics, supported by elevated oil prices and prudent fiscal management, which increase the likelihood that Oman's fiscal strength could be sustained at a level consistent with a higher rating.
A declining debt burden, in particular the foreign-currency portion of the debt, increases the government's capacity to absorb shocks, such as those caused by cyclical fluctuations in the global energy markets or increases in global interest rates.
The affirmation of the Ba1 ratings is supported by Oman's high per-capita income, the government's moderate debt burden, and its improving track record of fiscal policy effectiveness, which are set against the economy's relatively modest growth dynamics and the sovereign's heavy economic and fiscal reliance on the hydrocarbon sector.
This reliance exposes government finances to sudden material deterioration in response to cyclical declines in oil prices and, in the longer term, to the negative credit effects of the global carbon transition.
The positive outlook reflects further improvements in Oman's government debt metrics observed over the past nine months, which increase the likelihood that Oman's fiscal strength could be sustained at a stronger level, the agency noted. Further debt repayments during 2024 were supported by a fiscal surplus, which reached around one per cent of the projected full year GDP in the first half of 2024.
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