In a noteworthy development that signifies a shift in Oman’s economic landscape, the nation’s long-term credit rating has been upgraded by global credit rating agency Standard & Poor (S&P) from “BB” to “BB+” with a stable outlook. This upgrade highlights the positive changes and growth taking place within Oman’s economy.
The assessment by S&P Global highlights a significant transformation occurring in Oman’s non-oil sector, indicating the potential for substantial growth in the upcoming years, particularly from 2023 to 2026. This shift is anticipated to have a crucial impact on enhancing the country’s financial prosperity.
Read more: Oman’s economy estimated to expand by 2.5 percent this year
Additionally, the agency forecasts that the government’s fiscal and economic momentum will persist until 2026, projecting an average year-on-year growth of 2 percent in Oman’s gross domestic product. This outlook indicates a positive trajectory for the country’s economic performance in the coming years.
According to the report, “Oman’s economy relies on the oil sector, which contributes approximately 30 percent to the GDP, 60 percent to goods exports, and 70 percent to government fiscal receipts. This dependency influences our evaluation of its fiscal and external resilience, and we have taken this into account in our rating assessment.”
The agency has forecasted a 1 percent deceleration in economic growth for 2023, primarily attributed to reductions in oil production.
However, the decline in oil output is expected to be offset by an increase in condensate and gas production.
Also, the non-hydrocarbon sector in Oman is expected to experience a 2 percent growth in 2023. Additionally, hydrocarbon manufacturing is projected to rebound and show positive momentum in 2024 and 2025.
Support for debt repayment
Additionally, S&P expects an average Brent crude price of $85 per barrel in 2024. The rise in oil prices will bolster the government’s dedication to using fiscal surpluses to repay debt.
Moreover, the agency has projected a decrease in government debt to 38 percent of Oman’s GDP in 2023. This is a decline from the previous year’s level of around 40 percent.
Significant surge
Additionally, data from the nation’s central bank reveals a significant surge in credit extended to the private sector. By the end of July 2023, it had reached a growth rate of 5.2 percent. The total credit amount extended amounted to 20.2 billion Omani rials ($52.41 million).
Shedding light on another significant sector, Oman’s tourism industry is expected to undergo expansion in the coming years. Salim Almahruqi, Oman’s minister of heritage and tourism, has projected an increase in its contribution to the GDP. It is expected to reach 2.75 percent, surpassing the recorded 2.4 percent in 2023.
According to Oman News Agency (ONA), the tourism industry accounted for 1.07 billion Omani rials out of the total revenue of 1.9 billion Omani rials in 2022.
IPO ambition
Furthermore, in a recent announcement, OQ Gas Networks, the pipeline business of Oman’s state oil company OQ, revealed its intention to raise up to 297 million rials through its upcoming initial public offering (IPO). If successful, this could become the largest listing in the country’s history.
The Oman Investment Authority-owned company, OQ, has outlined its plan to privatize multiple assets over the next five years.
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