Fitch upgrades Oman’s outlook to positive, affirms ‘BB+’ rating

Fitch Ratings on Wednesday revised Oman’s Outlook to Positive from Stable and affirmed its Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BB+’. The change, the rating agency said, reflects improved public and external finances, with lower government and state-owned entity (SOE) debt/GDP, reduced external debt, and accumulated net sovereign foreign assets.

Fitch forecasts Oman’s budget surplus is 0.7 per cent of GDP in 2025, followed by a minor deficit of 0.2 per cent in 2026, based on projected Brent oil prices of $70 per barrel in 2025 and $65 in 2026.

Oman’s fiscal breakeven oil price is estimated at $67-70 per barrel. Moreover, the country’s non-oil primary balance is expected to improve due to spending moderation and enhanced tax collection, with the non-oil primary deficit falling from 43 per cent of non-oil GDP in 2020 to 27 per cent in 2024, and projected at 24 per cent in 2026.

Government debt/GDP is expected to decline from 37.5 per cent in 2023 to 34 per cent in 2024 and 33.3 per cent in 2026. External debt is projected to decrease by nearly $2.8 billion in 2024 to USD26.6 billion (24 per cent of GDP).

Oman’s sovereign net foreign assets have strengthened to 10 per cent of GDP in 2024 from -9 per cent in 2020. SOE debt is forecast to stabilise around 40 per cent of GDP, with external debt at 17 per cent of GDP.

Total net external debt is expected to stabilise at 13 per cent of GDP in 2025-2026. Economic growth is projected at 1.8 per cent in 2024, driven by non-oil growth of 3.7 per cent, and the non-oil economy is expected to maintain growth above 3 per cent in 2025 and 2026.

Fitch’s rating model assigns Oman a score equivalent to a ‘BBB’ rating, reflecting strengths in GDP per capita and governance, but risks from high dependence on oil revenue. The Country Ceiling for Oman is ‘BBB-‘, one notch above the IDR, reflecting moderate constraints against capital controls.

Attribution: Fitch Ratings

Subediting: Y.Yasser