JEDDAH: Fitch Ratings has upgraded Oman to investment-grade status, raising its long-term foreign-currency rating from BB+ to BBB-, citing the Sultanate’s stronger public finances, improved external position, and continued commitment to prudent fiscal management.
The agency noted that Oman has successfully strengthened fiscal discipline, reducing government debt significantly to around 36 percent of gross domestic product in 2025, down from about 68 percent in 2020, according to the Oman News Agency.
With the outlook remaining stable, Fitch expects the budget deficit to stay at a safe level of approximately 1 percent of GDP in 2026–2027, assuming an average Brent crude price of $63 per barrel, while the fiscal breakeven oil price is estimated at around $67 per barrel for the same period.
The upgrade reflects Oman’s sustained fiscal and external recovery since 2020, underpinned by sharp debt reduction, disciplined budgeting, and stronger external buffers.
Government debt has fallen to around 36 percent of GDP from nearly 68 percent five years ago, while the sultanate has turned into a net external creditor for the first time in years, according to Fitch’s report.
The agency added that the rating also factors in steady non-oil growth, rising foreign investment, and reforms aimed at widening the tax base, even as it cautioned that Oman’s heavy reliance on hydrocarbons and state-owned enterprise leverage remain key structural risks.
“Domestic consumption, robust foreign investment and tourism will maintain non-oil growth above 3.5 percent in 2026 and 2027,” the rating agency’s release stated.
On the economic front, Fitch expects Oman’s GDP to grow by around 4 percent in 2025, up from a 1.6 percent expansion in 2024, supported by strong non-oil sector growth of 3.8 percent.
“Domestic spending, continued foreign direct investment inflows, and expanding tourism are likely to sustain non-oil growth above 3.5 percent over 2026–2027,” ONA reported.
The report also underscored a major turnaround in Oman’s external finances, with the country becoming a net external creditor in 2024, equivalent to 2 percent of GDP, compared with its net debtor position in 2021.
This improvement, ONA said, was driven by government debt repayments, reduced liabilities at state-owned firms, stronger foreign assets, and higher reserves.
Fitch emphasized that Oman’s rating could be upgraded further if the government strengthens its resilience to oil price volatility by broadening non-oil revenues, sustaining fiscal gains through continued debt reduction, and bolstering external reserves and sovereign wealth fund assets, as per ONA.
