Ratings agency Standard & Poor’s (S&P) has affirmed the ‘A’ long-term and ‘A-1’ short-term foreign and local currency sovereign credit ratings on the Sultanate of Oman, based on its view of the sovereign’s good fiscal performance.
“The stable outlook is based on our expectation that the high level of government assets, the expected increase in LNG exports, and the growth of the nonhydrocarbon sector will continue to mitigate concerns stemming from the volatility in oil prices and the recent years’ decline in crude oil production,” said S&P.
“The current Enhanced Oil Recovery (EOR) techniques have so far helped to reverse the trend temporarily,” it continued. “The outlook also assumes that fiscal policy will remain oriented toward fulfilling Oman’s development needs and limiting vulnerability to fluctuations in oil production and prices.”
The agency said that the ratings could be raised if the historical decline in crude oil output was reversed or if the government strengthened its domestic tax revenue base significantly – through the introduction of VAT, for example.
It also warned that the ratings could come under downward pressure if the geopolitical or domestic political situation were to deteriorate sharply, or if government assets were to decline more quickly than it forecast.
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