Oman’s credit ranking was upgraded for the first time by Fitch Ratings as higher oil prices eased financing pressures and reversed nearly a decade of budget deficits.
Fitch raised Oman’s long-term foreign-currency rating by one notch to BB, according to a statement on Monday.
“The upgrade reflects significant improvements in Oman’s fiscal metrics, a lessening of external financing pressures and ongoing efforts to reform public finances,” Fitch analysts said.
Oman has emerged as a reform standout, with a programme to balance the books and lower its debt that included the introduction of value-added tax last year.
Oil’s surge on the back of Russia’s attack on Ukraine has pushed crude above the break-even level for almost all the Middle East’s exporters, shifting budgets into surplus.
But Oman, the biggest oil exporter outside OPEC, has also stayed the course on reforming its finances, seizing on the opportunity to repay debt with part of its revenue windfall. Fitch forecasts the government will run budget surpluses of 5.5 per cent and 3.4 per cent of GDP in 2022 and 2023, respectively, its first since 2013.
“While we expect oil prices to trend down over the medium term and there has been some dilution of fiscal reform in 2022, we believe that commitment to fiscal consolidation via the state’s medium term fiscal plan will be sufficient to limit renewed deterioration in public- and external-finance metrics,” Fitch’s analysts said.