The Sultanate of Oman has seen its sovereign credit rating upgraded for the second consecutive time this year from “Ba2” to “Ba1” by the US-based global ratings agency, Moody’s Investor Service, on Friday.
Moody’s also changed the country’s outlook to “stable” from “positive” and comes as the Gulf state lowered its debt burden, amid supportive oil prices, exploiting alternative revenues and spending restraint.
“The rating upgrade reflects Moody’s expectation that the improvements in Oman’s debt burden and debt affordability metrics during 2023 will last, as the government’s actions amplify the oil prices windfall gains through spending restraint and prioritisation of debt repayment,” the ratings agency said.
In May, Oman’s ratings were upgraded from “Ba3” to “Ba2” while Moody’s stated at the time: “The positive outlook captures the prospect that the improvements in the government’s debt metrics will be sustained over the next few years, despite lower oil prices, through the maintenance of spending discipline and further implementation of fiscal and structural reforms.”
Despite the current improvements, the agency warned that Oman’s heavy economic and fiscal reliance on the hydrocarbon sector poses significant risks, in case of a decline in global oil demand prices.
Last year, US think tank the Washington Institute attributed Oman’s post-pandemic economic success in the face of a looming economic crisis, to the political leadership of Sultan Haitham Bin Tariq Al-Said as much as the global price recovery and “the extraordinary ability of Petroleum Development Oman to squeeze just a bit more from its complex geology.”