Improvements in Oman's Credit Outlook Driven by OIA Reforms Enhancing Financial Resilience
In a recent affirmation of its credit rating, the Sultanate of Oman received a BBB- rating with a positive outlook from Standard & Poor's as of March 2025. This upward adjustment reflects the country's ongoing commitment to fiscal consolidation and improved economic governance, with substantial contributions from the Oman Investment Authority (OIA). Since taking charge of state-owned enterprises under the National Development Fund in 2020, the OIA has implemented robust governance reforms and targeted strategies aimed at reducing debt, which directly support the enhancement of Oman's financial profile.
OIA has notably reduced the debt owed by its subsidiaries, decreasing the total from $29.64 billion in 2021 to $23.92 billion by the end of the third quarter of 2024. One notable success within this initiative is the OQ Group, Oman’s integrated energy company, which has seen an upgrade in its creditworthiness. This improvement has led to a significant enhancement in the net debt-to-earnings ratio, thereby boosting both financial efficiency and long-term sustainability. At the same time, the OIA renegotiated loan terms with banking partners to secure more cost-effective and flexible financing structures, further augmenting the operational resilience of its portfolio.
Another vital area of focus for OIA has been reducing reliance on state guarantees. This strategic shift aims to enhance financial independence and governance among its key subsidiaries. For example, guarantees for large enterprises, including the OQ Group, Asyad Group (Oman's logistics company), and Nama, which provides essential services such as electricity, water, and wastewater management, have dropped from $8.32 billion in 2021 to $4.68 billion in 2024. Notably, no new guarantees have been issued since this reduction. Additionally, the Duqm Refinery and Petrochemical Industries Company (OQ8) recently passed the Lenders Reliability Test (LRT), enabling the release of over $2 billion in shareholder guarantees. This transition has significantly reduced fiscal risks for the government and heralded a new era of accountability, motivating companies to leverage their financial capabilities and drive future growth.
In pursuit of greater transparency across its operations, OIA has mandated the disclosure of financial performance across its entire portfolio. Concurrently, strategic partnerships have attracted foreign investment in priority sectors, leading to a bolstered foreign exchange reserve. Collectively, these initiatives are in alignment with Oman Vision 2040, aiming to enhance confidence in the Omani economy while ensuring sustainability over the long term. Furthermore, these reforms position the Sultanate of Oman as a trusted and competitive destination for investment, reflecting the efficacy of OIA's governance strategies in fostering economic resilience and growth.
OIA has notably reduced the debt owed by its subsidiaries, decreasing the total from $29.64 billion in 2021 to $23.92 billion by the end of the third quarter of 2024. One notable success within this initiative is the OQ Group, Oman’s integrated energy company, which has seen an upgrade in its creditworthiness. This improvement has led to a significant enhancement in the net debt-to-earnings ratio, thereby boosting both financial efficiency and long-term sustainability. At the same time, the OIA renegotiated loan terms with banking partners to secure more cost-effective and flexible financing structures, further augmenting the operational resilience of its portfolio.
Another vital area of focus for OIA has been reducing reliance on state guarantees. This strategic shift aims to enhance financial independence and governance among its key subsidiaries. For example, guarantees for large enterprises, including the OQ Group, Asyad Group (Oman's logistics company), and Nama, which provides essential services such as electricity, water, and wastewater management, have dropped from $8.32 billion in 2021 to $4.68 billion in 2024. Notably, no new guarantees have been issued since this reduction. Additionally, the Duqm Refinery and Petrochemical Industries Company (OQ8) recently passed the Lenders Reliability Test (LRT), enabling the release of over $2 billion in shareholder guarantees. This transition has significantly reduced fiscal risks for the government and heralded a new era of accountability, motivating companies to leverage their financial capabilities and drive future growth.
In pursuit of greater transparency across its operations, OIA has mandated the disclosure of financial performance across its entire portfolio. Concurrently, strategic partnerships have attracted foreign investment in priority sectors, leading to a bolstered foreign exchange reserve. Collectively, these initiatives are in alignment with Oman Vision 2040, aiming to enhance confidence in the Omani economy while ensuring sustainability over the long term. Furthermore, these reforms position the Sultanate of Oman as a trusted and competitive destination for investment, reflecting the efficacy of OIA's governance strategies in fostering economic resilience and growth.
Topics Financial Services & Investing）
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