Ashraf AboArafe
Moody’s credit rating agency issued its credit rating report for the Sultanate of Oman, in which it raised the level from “Ba3” to “Ba2”, while maintaining a positive outlook. As a result of the decline in public debt burdens and the improvement in the Sultanate of Oman’s ability to meet its financial obligations during the year 2022 AD.
The agency attributes this improvement, in addition to the increase in public revenues, to the tangible efforts made by the government in controlling financial conditions, and its decision to direct financial surpluses towards reducing public debt, noting the improvement in the effectiveness of fiscal policy and the efficiency of financial governance.
In its report, the agency stated that government efforts had a tangible impact in maximizing financial surpluses, and more than 15% of the total public debt declined during 2022 AD, down from 68% in 2020 AD to 40% in 2022 AD as a percentage of GDP.
The agency indicated that the positive future outlook reflects the continued improvement of the public debt rate over the next few years, despite the decline in oil prices, by maintaining the level of spending control and taking more developmental financial measures.
The agency stated that despite achieving additional financial revenues in 2022 AD, the government maintained the level of spending, noting that it had made an assessment about the shift in the government’s approach to managing fiscal policy during the period of high oil prices, stressing the improvement in the effectiveness of fiscal policy and its management in an inappropriate manner. Unprecedented, which will enhance the credit position of the Sultanate of Oman in the medium and long term.
The agency said that the medium-term financial plan and initiatives to enhance non-oil revenues contributed to this improvement, praising the removal of expenses associated with the oil sector from the state’s general budget, and this would contribute to reducing financial risks resulting from fluctuations in oil prices.
The agency expects that oil prices will average between 80 and 85 US dollars per barrel during the years 2023/2024, and that the green hydrogen sector will contribute to reducing the risks associated with the long-term credit rating as a result of the global trend towards carbon neutrality.
The agency confirmed that there is increasing confidence in the continuation of the improvement witnessed in financial indicators during the year 2022 AD in the medium term, which would contribute to raising the credit rating, stressing that it is unlikely that the level of the credit rating of the Sultanate of Oman will decline in the near term.
And the agency indicated that this confidence comes from the government’s continuation of measures to control financial conditions, which led to an improvement in the financial balance and strengthening its ability to deal with future oil market fluctuations.
