Muscat, Fitch credit rating agency has affirmed Oman at ‘BB-’, the same standing as before.
This outlook reflects the stringent circumstances being undergone by the Sultanate, including the need to implement fiscal sustainability and the impacts of coronavirus (Covid-19) pandemic on the local economy.
In a recent report, the international agency indicated that the medium-term fiscal plan that the Sultanate began to implement contributed towards the improvement of the country’s financial position and that the plan’s financial effect aggregates at RO 4.7 billion by the year 2024. “The MTFP (medium term fiscal balance plan) has identified fiscal measures with a potential gross impact of RO 4.7 billion by 2024 (about 15% of GDP).”
In its report, Fitch showed that the Sultanate’s deficit is expected to decline to 6.1% of the Gross Domestic Product by 2021, while economic growth rate improves by 3.3% by 2022 due to moderate growth in oil production that would prevail before the return back to pre-Covid-19 levels. “We expect growth to strengthen in 2022, to 3.3%, with higher average oil production and greater post-pandemic normalisation, before slower growth in 2023-2024 amid ongoing fiscal austerity” said Fitch in its report.
The international agency pointed out that the required break-even point for oil prices will come down from its high levels by the end of 2025. It forecasts a decline in the previous non-oil deficit from 40% to 25% amid the implementation of measures of rationalization of spending and fiscal sustainability at current rates.
Earlier, the International Monetary Fund commended the steps undertaken by the Sultanate to improve its general finance. It affirmed that the implementation of target initiatives and programmes will result in effective (rationalized) spending, lowering deficit and improving scopes for better credit rating.
Source: Oman News Agency