The ratings agency affirmed Oman’s ‘B+/B’ long- and short-term foreign and local currency sovereign credit ratings.
Oman, a relatively small oil producer, is more sensitive than its hydrocarbon-rich Gulf neighbours to oil price swings, meaning it was hit especially hard by 2020’s price crash and the COVID-19 pandemic.
“Economic and fiscal pressures on Oman are easing, as the effects of the sharp drop in oil prices in 2020 and the COVID-19 pandemic abate,” S&P said in a statement.
It expected the fiscal deficit to decrease to 4.2% of gross domestic product this year from 15.3% of GDP in 2020.
But lower oil prices from 2023 would result in a worsening fiscal trajectory despite planned reforms, it said, adding that total funding needs — fiscal deficit plus maturing debt — would remain high, averaging about 12% of GDP through 2024.
Oman’s debt as share of GDP hit nearly 80% last year having been little more than 5% in 2015. The International Monetary Fund last month estimated that total government debt is expected to drop to 70% this year.
The sultanate has begun measures in the past year to fix its finances, including the introduction of a value-added tax and the decision to work with the IMF to develop a debt strategy.
Source: Economy - investing.com
