Oman's Credit Outlook Strengthened by Reform Initiatives from OIA

The recent affirmation of the Sultanate of Oman's credit rating at BBB- with a positive outlook by Standard & Poor's indicates a significant improvement in its financial credibility. This rating, confirmed in March 2025, highlights the effective fiscal consolidation efforts by the government, alongside enhanced economic management. A pivotal factor contributing to this development is the Oman Investment Authority (OIA), the nation's sovereign wealth fund. Since taking over the oversight of state-owned enterprises within the National Development Fund framework in 2020, the OIA has implemented robust governance reforms and targeted debt reduction strategies, strengthening the financial position of its portfolio companies and directly enhancing Oman's credit profile and overall financial resilience.

In a remarkable feat, the OIA managed to decrease the accumulated debt of its subsidiaries from $29.64 billion in 2021 to $23.92 billion by the end of the third quarter of 2024. A notable case is the OQ Group, Oman’s integrated energy player, which improved its credit rating leading to a significant enhancement in its net debt-to-EBITDA ratio. This adjustment has bolstered both its financial efficiency and long-term sustainability. At the same time, the OIA renegotiated loan terms with banking partners, ensuring more cost-effective and flexible financing structures, thus reinforcing operational resilience across its portfolio.

Furthermore, the OIA has made significant strides in reducing its reliance on government guarantees, aiming to enhance the financial independence and governance of its key subsidiaries. Guarantees provided to major corporations like the OQ Group, Asyad Group (Oman's logistics provider), and Nama (the primary utility provider for electricity, water, and sanitation) dropped from $8.32 billion in 2021 to $4.68 billion in 2024, with no new guarantees issued since then. Additionally, the Duqm Refinery and Petrochemical Industries Company (OQ8) recently passed the Lenders' Reliability Test (LRT), unlocking over $2 billion in shareholder guarantees. This decisive shift has reduced fiscal risks for the government and marked a new era of accountability, encouraging companies to leverage their financial strengths for future growth.

The OIA has further reinforced transparency across its portfolio by mandating financial performance disclosures. Simultaneously, strategic alliances have attracted foreign investment to priority sectors, contributing to a boost in foreign exchange reserves. These collective initiatives exemplify the OIA's commitment to Vision Oman 2040, enhancing confidence in the Omani economy and supporting long-term sustainability. Moreover, these efforts position the Sultanate of Oman as a credible and competitive investment destination.

This positive trajectory not only reflects OIA's robust management practices but also shapes Oman’s future economic landscape, instilling a sense of optimism for both domestic and international stakeholders. As reforms continue to unfold, the potential for Oman to emerge as a leading player in the regional economy becomes increasingly evident.