#Oman Investment Authority #Oman #Muscat #Credit Rating #Oman economy

Oman's Credit Outlook Strengthens

The Sultanate of Oman has received a significant boost in its credit outlook, recently reaffirmed at BBB- with a positive perspective by Standard & Poor's as of March 2025. This upgrade is a testament to the effective fiscal consolidation efforts implemented by the Omani government and the substantial progress in economic management, particularly through the focus of the Oman Investment Authority (OIA).

The Role of the Oman Investment Authority

Since the OIA was tasked with overseeing public enterprises through the National Development Fund in 2020, it has made notable strides in enhancing governance and reducing public debt. The agency successfully decreased the aggregated debt of its subsidiaries from $29.64 billion in 2021 to $23.92 billion by the third quarter of 2024. A prime example of this financial engineering is the OQ Group, Oman’s integrated energy company, which has improved its credit ratings, reflecting a better net debt-to-earnings ratio. This enhancement signifies not only financial effectiveness but also long-term viability.

Moreover, the OIA has renegotiated loan terms with its banking partners to secure more favorable and flexible financing structures. This strategic maneuver has fortified the operational resilience of its portfolio, enabling companies to thrive independently of direct government guarantees.

Strategies for Reducing Reliance on Government Guarantees

In an effort to improve financial independence and governance for its major subsidiaries, the OIA has significantly curtailed its reliance on government guarantees. The guarantees provided to major players such as the OQ Group, Asyad Group (Oman's logistics service provider), and Nama (the primary supplier of electricity, water, and sanitation services) have dramatically fallen from $8.32 billion in 2021 to $4.68 billion in 2024. Notably, no new guarantees have been issued since this reduction, marking a pivotal shift towards greater accountability and reduced fiscal risk for the Omani government.

Additionally, the Duqm Refinery and Petrochemical Industries Company (OQ8) recently passed the Lenders Reliability Test (LRT), unlocking over $2 billion in shareholder guarantees, and further alleviating the fiscal burden from the state. This pivotal change signifies an era of responsibility, encouraging companies to leverage their financial strength and promote sustainable growth.

Enhanced Transparency and Strategic Partnerships

The OIA is also committed to promoting transparency across its entire portfolio by mandating the disclosure of financial performance metrics. Concurrently, it has formed strategic partnerships that attract foreign investments in priority sectors, bolstering the economy’s currency reserves. These collective initiatives align with the Oman Vision 2040 framework, enhancing confidence in Oman's economy while supporting long-term sustainability.

Overall, the adjustments and reforms initiated by the Oman Investment Authority not only reinforce the Sultanate of Oman’s competitiveness as a reliable investment destination but also contribute to a more stable and resilient financial ecosystem. Omani leadership’s commitment to fostering an attractive environment for investors showcases its dedication to economic reforms and sustainable growth, reinforcing the foundation for future advancements.

Conclusion

Oman's credit outlook has seen a positive transformation, showcasing the effectiveness of the Oman Investment Authority's ongoing reforms. As the Sultanate continues to navigate the global economic landscape, these proactive measures are expected to elevate the country’s profile, encouraging robust foreign investment and sustainable economic development in the years to come.