S&P Global Ratings has upgraded Oman’s credit rating from “BB-”to “BB”, with stable future outlook due to improved fiscal performance of the state.

S&P also cited other indices, including improved performance in the balance of payments, measures undertaken by the government within the Medium Term Fiscal Balance Plan and a rise in oil prices as factors projecting positive outlook, coupled with the amelioration of net asset position in 2023, according to a report in Oman News Agency (ONA).

S&P pointed out that the government of Oman exerted extensive efforts in bringing down the State’s indebtedness, making use of additional financial returns. The international agency projects a decline in the public debt rate vis-à-vis the Gross Domestic Product (GDP) from 61% in 2021 to 44% in 2022.

The agency also projects a rise in Oman’s revenues over the next two years, along with sustained fiscal surplus in the State’s Budget 2024—which will enhance levels of the country’s financial reserves and achieve a 5.8% financial surplus over the GDP this year (2022).

Current account is also set to post a 5.2% surplus vis-à-vis the GDP, compared to deficits of 4.9% and 16.2% in 2021 and 2020, respectively. It said that economic growth in Oman will be supplemented by a projected rise in hydrocarbon production, improved investment rates and government measures directed at supporting society and the private sector. S&P expects Oman’s GDP to pick up by about 4% in 2022 and 3% in 2023.

Meanwhile, non-oil activities are scheduled to be the prime motivator of growth over the coming years, according to S&P, which projects a private sector growth of 1.8% in 2022 and 2.5% over the period 2024-2025. The international agency commended the government’s tangible efforts in consolidating the principle of transparency and disclosure of financial statements and GDP data through the publication of regular circulars.

S&P noted that Oman’s credit rating may persist in its upward trend, provided measures to enhance the State’s financial position are maintained by channeling more financial surplus into the public debt reduction course and augmenting fiscal flexibility to help address any unexpected crises or upheavals.

Earlier this year, S&P upgraded Oman’s credit rating twice, from “BB-” to ““BB”, a notch higher over “B+” in 2021. This was credited to the government’s efforts to rectify financial conditions and cut down public debt, placing the country on the right path to achieve its desired national goals.