Oman's Financial Strength Improves as OIA Implements Strategic Reforms to Boost Credit Ratings

Strengthening Financial Resilience in Oman

In April 2025, Oman received a notable boost to its creditworthiness as Standard & Poor's affirmed its rating at BBB- with a positive outlook. This achievement is largely attributed to the effective fiscal management and consolidation efforts by the Omani government, complemented significantly by the pivotal role played by the Oman Investment Authority (OIA). Since its establishment in 2020, when it took charge of state-owned enterprises under the National Development Fund, OIA has been on a transformative journey toward enhancing financial governance and economic resilience.

The Role of Oman Investment Authority (OIA)

The OIA has made substantial progress in reducing the collective debt of its subsidiaries. From a staggering USD 29.64 billion in 2021, the debt dropped to USD 23.92 billion by the third quarter of 2024. One of the most notable improvements came from OQ Group, an integrated energy company in Oman, which recently benefited from an upgraded credit rating. This upgrade led to a significant improvement in its net debt-to-profit ratio, showcasing better financial health, efficiency, and sustainability in operations.

Additionally, the OIA has renegotiated loan agreements with various banks to secure more favorable financing terms that support the operational stability and resilience of its subsidiary companies. These strategies are critical as Oman continues to navigate through global economic uncertainties.

Reducing Reliance on Government Guarantees

A key advancement made by the OIA has been the reduction of its subsidiaries' dependence on government guarantees. Over the past three years, guarantees given to critical entities such as OQ Group, Asyad Group (the logistics provider), and Nama (the primary utility provider) saw a decrease from USD 8.32 billion in 2021 to USD 4.68 billion by 2024. No new guarantees have been issued since, marking a major shift toward enhancing the financial independence of these firms. For instance, the Duqm Refinery and Petrochemical Industries Company (OQ8) successfully passed the Lenders Reliability Test, allowing it to release over USD 2 billion in shareholder guarantees. This move not only mitigates fiscal risks for the government but also promotes a culture of accountability and encourages enterprises to leverage their financial strengths for future growth.

Enhancing Financial Transparency and Foreign Investments

Transparency within the OIA's portfolio has been another significant focus. The authority mandated that financial performances of its subsidiaries be disclosed publicly, enhancing credibility and fostering investor trust. Moreover, through strategic partnerships, OIA has been successful in attracting foreign investment into priority sectors, bolstering foreign currency reserves, and reinforcing investor confidence.

These developments align seamlessly with Oman Vision 2040, underscoring the government's commitment to diversifying the economy and enhancing its appeal as a competitive investment destination. By implementing these reforms and striving for increased economic resilience, Oman demonstrates its ability to adapt and thrive in an ever-changing economic landscape.

Conclusion

In summation, the recent credit outlook for Oman signifies a commitment to sound financial practices and strategic governance reforms facilitated by the Oman Investment Authority. As the country continues to implement these measures, it is positioning itself as a more stable and attractive destination for investments. The importance of the OIA in driving these reforms cannot be understated as it lays the foundation for sustainable economic growth and long-term financial health.