Moody’s Investors Service has upgraded Oman’s issuer and long-term senior unsecured ratings to Ba2 from Ba3, citing the country’s improved debt burden and debt affordability metrics during 2022. The move is expected to have a positive impact on the country’s economic outlook.
Oman’s economic resilience has been strengthened due to the massive increase in oil and gas revenue. The country’s dependence on the hydrocarbon sector has historically left it exposed to volatile prices in international markets, but the recent increase in revenue has helped to offset some of these risks.
According to Moody’s report, Oman’s debt affordability metrics have improved significantly due to higher hydrocarbon revenue and government measures to reduce spending and improve public finances. As a result, the sovereign’s resilience against potential shocks has increased.
The rating agency also noted that Oman has made progress in diversifying its economy away from oil and gas, with an increasing focus on non-oil sectors. This has helped to reduce the country’s reliance on hydrocarbon revenue and reduce the exposure to external shocks.
In addition, Moody’s stated that Oman has a stable political environment and a supportive regulatory framework, which is favorable for economic growth and investment.
The positive outlook for Oman reflects the expectation of continued improvements in the country’s economic metrics, including debt affordability, fiscal and external metrics, and economic diversification. Moody’s expects Oman’s GDP to grow by 3.2% in 2023, driven by a rebound in the oil and gas sector and a recovery in the non-oil sector.
Oman has been taking steps to diversify its economy away from hydrocarbons, with a focus on developing the tourism, logistics, and manufacturing sectors. The country has also been investing in infrastructure projects, including ports, airports, and railways, to support economic growth and increase connectivity with the rest of the region.
Moody’s noted that Oman’s strategic location at the crossroads of Asia, Africa, and Europe, and its access to key shipping lanes, provides significant potential for economic growth and investment opportunities.
The upgraded rating is likely to provide a boost to Oman’s efforts to attract foreign investment and expand its presence in global capital markets. It also reflects the country’s commitment to improving its fiscal and economic policies, as well as its efforts to diversify its economy and reduce its reliance on hydrocarbons.
In response to the news, the Omani government expressed its satisfaction with the upgraded rating, highlighting the country’s ongoing commitment to implementing economic reforms and attracting foreign investment.
The positive outlook for Oman’s economy is expected to continue, driven by ongoing efforts to diversify the economy, increase investment, and improve economic resilience. The country is well-positioned to take advantage of its strategic location, access to key shipping lanes, and favorable regulatory environment to achieve sustainable long-term economic growth.
Oman’s upgraded rating by Moody’s is a significant validation of the country’s economic progress and commitment to implementing reforms. The positive outlook reflects the positive trajectory of Oman’s economy and its efforts to diversify away from oil and gas dependency.
The increase in oil and gas revenue has played a pivotal role in improving Oman’s debt burden and debt affordability metrics. With a substantial boost in revenue, the country has been able to offset the risks associated with volatile international oil prices. This, in turn, has bolstered Oman’s resilience against potential shocks and enhanced its economic stability.
Moody’s recognition of Oman’s efforts in economic diversification is also noteworthy. The country has undertaken proactive measures to reduce its reliance on hydrocarbon revenue and expand its focus on non-oil sectors. By doing so, Oman has successfully mitigated risks and laid the groundwork for sustainable economic growth.
