Oman’s S&P ratings downgraded, outlook also negative

Oman Iran US HikersOman’s sovereign debt has been downgraded by the Standard and Poor’s (S&P) rating agency from A- to a BBB+ citing a negative outlook because “the government’s fiscal and external positions could deteriorate beyond our current expectations over the next two years.”

The low global oil and gas prices led to the decision considering that Muscat is heavily dependent on revenues generated from its hydrocarbon sales which provides 75% of state income.

The government had a budget deficit of OMR2.93 billion in the first nine months of the year and the deficit is expected to widen as prices have shown no sign of increasing.

There was a surplus of around OMR136 million during the same period in 2014. S&P signaled that “a period of sustained low oil prices will impair Oman’s fiscal and external balances more than we had previously expected.”

Undersecretary of the finance ministry, Naser Al Jashmi, stated that major reforms are gradually being implemented to curb the budget deficit.

Oman is expected to introduce new taxes and increase some, suspend government-financed projects that do not have an impact on the economy’s growth, reduce subsidies and increase certain tariffs and fees. Per Diem allowances of government employees could also be reduced.

Moody’s  Investors service could also downgrade Oman’s sovereign debt currently rated at A-1 after it warned in August that the low prices coupled will the high government spending would not be sustainable in a couple of years.

The S&P downgrade is not expected to affect Muscat at the moment since its bonds are bought by the local banks and investors. Oman is the largest non-OPEC member producer in the Gulf but it has been vulnerable to the low prices because of the lack of diversity of its economy.

Short URL: http://me-confidential.com/?p=11209

Posted by on Nov 23 2015. Filed under Finance, Headlines. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

Leave a Reply

Recently Commented

  • Badia Ouadi: What about the 20/20 vision for tourism which HRH has endorsed Himself? There are hundreds of western...
  • Achraf: Wise words from a wise king. And dont forget to work hand in hand. Stability Will be à important factor
  • Mehmet: Erdogan and the Turkish government become more pathetic and miserable and unrealistic day by day.
  • Telh: Israel should take a leaf out of their book.
  • Gemma: Well on this task Jordan gets a big fat F! We need to find a more competent custodian before Al Aqsa is lost...