MUSCAT: Fitch Ratings has upgraded Oman’s ‘Long-Term Foreign-Currency Issuer Default Rating’ (IDR) to ‘BB+’ from ‘BB’ with a stable outlook.
In a report issued on Monday, Fitch said the upgrade reflected the use of high oil revenues to pay down debt and spread its maturity, spending restraint reducing external risks, and an increase in Fitch’s oil price forecast. “We project general government debt to fall to 36% of GDP in 2023 and stabilise at around 35% in 2024 and 2025, below the ‘BB’ peer median of 54%. This compares with our forecast of 45% of GDP in 2023 when we last upgraded Oman in August 2022,” the report stated.
“The reduction of Oman’s fiscal breakeven price to below USD70/bbl over our forecast horizon from USD80-90/bbl over 2017-19 significantly reduces vulnerability to oil price swings, although risks remain,” the report said.
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Oman continues to pre-pay some its debt, using the budget surplus from high oil prices. “We project debt to decrease by about 8% in nominal value in 2023. The Petroleum Reserve Fund has not been used for these repayments and was over USD2.5 billion in August 2023. Oman’s debt management has smoothed its debt profile, reducing the risk of liquidity pressures,” the report added.
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