Oman’s credit ranking was affirmed at BB/B by S&P Global Ratings which has cautioned a negative outlook for the sultanate amid a continuing reliance on hydrocarbon products.
In a statement, S&P said they could lower the ratings on Oman further over the next 12 months “if we view the government as unable to contain external debt accumulation related to still-sizable fiscal deficits, which we expect will continue to increase through 2022”.
The sharp fall in oil prices over 2014-2016 and only modest recovery since has led to a significant deterioration in Oman’s GDP per capita and its fiscal and external metrics, similar to some other large oil exporters.
S&P said: “The ratings on Oman are supported by the sovereign’s still-modest net government debt stock levels of 0.4 percent in 2019, which is underpinned by relatively strong liquid government asset stocks estimated at about 50 percent of GDP.
“The ratings also reflect our view that timely support from neighbouring countries in the Gulf Cooperation Council (GCC) would likely be forthcoming, if needed; for example, in the event of a significant deterioration in the external reserves that, in our view, support the Omani rial’s peg to the US dollar.”
Oman derives about 35 percent of GDP, 60 percent of exports, and 70 percent of fiscal receipts from hydrocarbon products.
“Given this high reliance on the hydrocarbon sector, we view Oman’s economy as undiversified and subject to global oil industry dynamics,” S&P added. “We also view monetary policy flexibility as low, given the currency peg, although we note that it has provided a stable anchor for the economy for several decades.”
Source:https://www.arabianbusiness.com/politics-economics/430992-sp-predict-negative-outlook-for-oman