Muscat: The credit upgrade reflects Oman’s strengthened public finances and its ability to absorb economic shocks. Moody’s credited the government’s effective fiscal management, noting a significant drop in government spending—from over 41% of GDP during 2016–2020 to just 29% currently.

Public debt has also seen a steady decline, falling from 37.5% of GDP at the end of 2023 to 35.5% in 2024, with further reductions expected. Meanwhile, the public debt-to-revenue ratio has improved markedly to 7.2%, compared to about 9% in 2021.

Another key factor in the upgrade is the reduction in Oman’s breakeven oil price, now below $70 per barrel for 2024–2025—down from an average of $84 per barrel in the preceding years. This signals greater budget resilience amid oil market volatility.

Economic indicators also point to a positive trajectory. Oman recorded GDP growth of 1.7% at constant prices in 2024, with a modest inflation rate of 0.7%. The state’s general budget showed a 2.8% surplus, while the current account balance rose to 2.1% of GDP.

Moody’s further highlighted Oman’s long-term fiscal strategy, including ongoing efforts to diversify income sources. These include boosting non-oil revenues, expanding liquefied natural gas production by 2030, and advancing green hydrogen and related industries.

The agency noted that Oman’s credit rating could improve further if it continues to build resilience against oil price shocks and accelerates growth in the non-oil sectors, thereby reducing the non-oil primary deficit.