Oman reshuffles cabinet as ratings come under pressure

S&P puts Gulf state's ratings on CreditWatch with negative implications amid protests
Oman protesters cheer outside the burned house of the governor.
By Andy Sambidge
Mon 07 Mar 2011 07:14 PM

Standard & Poor's Ratings Services on Monday said that it has placed its long-term and short-term local and foreign currency ratings for Oman on CreditWatch with negative implications.

The rating agency's move came as Oman replaced 12 ministers in a cabinet reshuffle.

Darwish Bin Ismail Al Balushi had been appointed the Gulf nation’s finance minister as the ruler reshuffled the cabinet.

Dozens of protesters staging a sit-in for a ninth day in

front of the Shoura Council, a quasi-parliamentary advisory

body, cheered the news of the reshuffle.

S&P said it had left unchanged Oman's transfer and convertibility assessment as it did not see the recent political unrest affecting the likelihood of the sovereign restricting private sector access to foreign exchange reserves needed for debt servicing.

The agency also placed the ratings on Oman Power and Water Procurement Co on CreditWatch Negative, it said in a statement.

"The CreditWatch Negative placement reflects our view that the current social unrest in the country and the possible repercussions of regional conflicts could increase political risks in Oman, which might eventually also negatively affect economic growth and public finances," S&P said.

"If tensions were to escalate in Oman, it could lead to Oman's ratings being lowered within the next three months," it added.

However, S&P said that if the government is able to address public grievances without putting too much burden on public finances and external investor confidence, then the ratings could stabilise.

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