RIYADH: Further improvement in Oman’s debt burden led US-based Moody’s Investors Service to upgrade its credit rating for the second consecutive time this year from “Ba2” to “Ba1”.    

The upgrade in rating is attributed to improvements in debt affordability metrics, according to a statement.    

This positive shift primarily results from spending restraints and the utilization of additional revenues in reducing public debt.    

This reflects that the government’s adherence to fiscal prudence and its prioritization of debt repayments boosts the likelihood that the enhancements in debt metrics will be persistent and prolonged in the medium term.  

However, Moody’s altered its outlook on the Gulf country from positive to stable.  

Additionally, Moody’s anticipates a reduction in public debt to below 38 percent of the gross domestic product by the end of 2023. 

Furthermore, Moody’s expects a surplus of around 3.5 percent of GDP in 2023, along with a current account surplus of 2 percent of GDP in the same year.  

Other projections involve oil prices averaging between $80 and $85 per barrel in 2024 and 2025, respectively. 

In May, Oman’s issuer and long-term senior unsecured ratings were upgraded by Moody’s Investors Service from “Ba3” to “Ba2,” accompanied by an expected positive outlook. 

The change at that time mirrored the advancements in the country’s debt burden and debt affordability metrics in 2022, driven by a substantial increase in oil and gas revenue.  

This development contributed to an enhancement in the sovereign’s resilience against potential shocks, as highlighted in a report released by Moody’s at that time. 

“The positive outlook captures the prospect that the improvements in the government’s debt metrics will be sustained over the next few years, despite lower oil prices, through the maintenance of spending discipline and further implementation of fiscal and structural reforms,” noted Moody’s at the time. 

Oman’s spending restraint and its decision to use the surplus and previously accumulated financial buffers to service its debt demonstrate the country’s improving track record of fiscal policy effectiveness and governance strength, as stated in the report released at that time.