By Beatrice Thomas
Rating agency says sultanate has strong net external and gov't asset positions, prudent investment policies
Oman has been given a “stable” outlook by ratings agency Standard and Poor’s (S&P) in a nod to the Sultanate’s strong net external and government asset positions and prudent investment policies, it was reported.
In its latest report the agency has affirmed long and short-term sovereign credit ratings for Oman at A/A-1.
“The stable outlook balances the Sultanate’s strong fiscal and external position against risks from structural and institutional weaknesses, which could hinder policymaking, a young population that could pose challenges for economic policy and a limited monetary policy flexibility,” the report, carried by Times of Oman, said.
The ratings agency forecast GDP in Oman to grow five percent in 2013, underpinned by an increase in oil production to an average 0.94 million barrels per day (bpd) - up from 0.92 million bpd in 2012.
It also said growth in the non-oil economy was expected to remain robust, as a result of high investment and public and private consumption, with a per capita GDP of $21,700 in 2013.
Overall, a steady expansion in the Sultanate’s oil production since 2007 and large infrastructure and development investments have helped support overall economic growth, with real GDP growth averaging 6.5 percent during between 2007 and 2012, the Times reported.
However, S&P said although real growth had been strong, the agency’s estimate of Oman’s weighted-average, 10-year trend in real per capita GDP growth was below that of peers with a similar GDP per capita.
“The low growth in real per capita GDP largely reflects the high inflow of foreign workers boosting population growth numbers - migrant workers account for 44 per cent of the total population,” it said.
“Expansion in recurrent public spending since 2011 has contributed to a steep narrowing in the government’s fiscal surpluses from seven per cent in 2011 to 2.6 per cent in 2012 (including transfers to reserve funds and investment income).”