Fitch Ratings has lowered Oman’s credit rating for the second time this year, reducing it by one degree to “negative BB” from BBB, and maintaining its negative outlook, revealing the continuing erosion of the financial statements and the external balance.
Fitch expected a financial deficit for the Sultanate of Oman at about 20 percent of GDP in 2020, up from eight percent last year, due to a 32 percent drop in revenues due to falling oil prices in exchange for production, which far exceeded the eight percent spending cut.
The agency expects that the average price of oil in Oman's exports will reach $ 45 per barrel in 2020, which is much lower than its estimate of the price that achieves parity, which is $ 70. It is also expected to increase the debt to more than 80 percent of GDP this year, compared to 60 percent last year.
According to Fitch, the coming years will be an important test of the flexibility of financing Oman demonstrated in the past, and the sharp maturity schedule will keep Oman's financing needs large in the aftermath, even as the fiscal deficit curbed. And it expected that the total fiscal deficit and external debt maturities would reach between 12 and 14 billion dollars annually in the period from 2020 to 2022.
Source (Al-Arab newspaper - London, Edited)
