OMAN'S FISCAL REFORMS BOOST RATINGS

Oman’s fiscal health is showing remarkable improvement, as confirmed by the latest upgrade from S&P Global Ratings. The ratings raised the country’s long-term foreign and local currency sovereign credit ratings to ‘BBB-’ from ‘BB+’. This marks the second upgrade in 2024, reflecting the ongoing success of Oman’s economic reforms and its progress towards financial stability as part of Oman Vision 2040.

Assigning a stable outlook for Oman, the rating agency emphasised the positive impacts of the government’s fiscal and economic reform programmes. Notable measures such as the introduction of VAT, subsidy reforms and the comprehensive fiscal stability programme launched in 2022 have contributed to improved fiscal metrics.

These reforms, coupled with continued efforts to diversify the economy, have strengthened the country’s resilience to oil price volatility, a key vulnerability given the global energy market’s fluctuations. The improvement in fiscal health has been complemented by other positive economic developments, including a rise in state revenues.

According to the Ministry of Finance, the state general revenues reached RO 7.154 billion by July 2024, slightly lower than the same period in 2023, but with a notable 9 per cent increase in net oil revenues. This was driven by higher oil prices, averaging $83 per barrel, and oil production levels of 1.2 million barrels per day, contributing to a significant boost in government revenues.

Various international ratings agencies and market pundits have highlighted Oman’s reduced public sector debt and strengthened government finances, underpinned by rising oil revenues and prudent fiscal management.

While Oman remains exposed to the structural challenges of global oil price shifts, the country’s strategic approach to fiscal reforms has bolstered its creditworthiness.

Also laudable are the government’s ongoing efforts to stabilise its fiscal position and enhance economic diversification, which are key to achieving the long-term objectives of Oman Vision 2040. The latest ratings upgrade is a testament to its ability to adapt to changing economic conditions, manage its public finances effectively and create an attractive environment for foreign direct investment (FDI).

These advancements underscore Oman’s concerted efforts to improve its fiscal landscape, with initiatives that support economic diversification and stabilise government finances. The combination of strong fiscal policies, economic reforms and prudent financial management has significantly enhanced Oman’s credit profile, positioning it as a more resilient and attractive destination for investment.

With a continued commitment to fiscal stability and Oman Vision 2040 long-term goals, the country is set to sustain its positive economic trajectory, as evidenced by the credit rating upgrade, marking a new chapter in its economic resilience and growth.