On Monday, 15 August 2022, Fitch Ratings upgraded Oman’s long-term foreign currency issuer default rating by one notch from ‘BB-’ to ‘BB’ with a stable outlook. The issuer default rating represents Fitch Ratings’ assessment of the likelihood that Oman will default on its sovereign financial obligations – in this case, the long-term liabilities denominated in foreign currencies. Fitch Ratings is one of the three leading external credit assessment institutions (ECAI).
Oman's improved credit rating is driven by several factors, according to Fitch Ratings:
significantly improved fiscal metrics, driven by higher government revenues as oil prices have been at higher levels
the expectation of budget surpluses in 2022 (5.5% of GDP) and 2023 (3.4%) supported by high oil prices
reduced leverage, with government debt-to-GDP expected to fall from c. 70% in 2020 to 46.7% in 2022 and 44.9% in 2023, before increasing again to 50% by 2025, as per the rating agency’s forecasts
lower debt refinancing risk, as the government has completed its external funding needs for this year and reduced its unfunded 2023 maturities
improved GDP growth of 4.4% in 2022 – up from 3% in 2021 – driven mainly by the oil sector
Those factors are somewhat counteracted by the challenges Oman faces, including:
Fitch Ratings expects government spending to exceed its budget by 6% in 2022
certain structural challenges