Fitch Ratings raised the long-term default score of Omani currency issuers from BB to BB on August 15 with a solid outlook.
It’s a sign of how Middle Eastern oilmakers are benefiting from this year’s rise in oil prices, driven by Russia’s invasion of Ukraine in February. With the help of the same trends, the Saudi economy is expected to succeed by more than a trillion dollars in price this year. .
Oman is a much smaller economy, however, Fitch noted “significant improvements” in the sultanate’s fiscal measures this year, with emerging oil revenues supporting budget surpluses and leading to a sharp decline in the public debt-to-GDP ratio.
The rating firm forecasts a budget surplus of 5. 5% of GDP in 2022 and 3. 4% in 2023, after 8 consecutive years of deficit. a barrel this year to $85 next year.
Oman’s is also supported by a slow increase in its crude oil and condensate production to an expected point of 1. 1 million barrels per day over the constant period.
Oman’s government has used its supply of oil and fuel to pay off some of the country’s debts. In the first seven months of this year, it reduced the public debt burden by RO 2. 2 billion ($5. 7 billion). It now stands at about $48. 3 billion.
The economy has attracted some investment from wealthier neighbors, and Saudi Arabia’s Public Investment Fund recently committed $299 million.
The government has also used some of its additional profits to mitigate the effect on its citizens of high fuel costs and inflation in general. Fitch said spending is expected to be higher than expected in 2022 because of fuel and other subsidies for residents. He also noted that the deadline for the phasing out of electric power subsidies has been extended from five to ten years.
However, the government still faces many demanding situations and policymakers in Muscat will be aware that oil costs tend not to remain high for long periods of time. Fitch said Oman’s financial position is now significantly more comfortable compared to recent years, but added that its “medium-term financing desires remain significant and the point of Oman’s external debt is the best. “