RIYADH: Oman received an upgrade on its issuer and long-term senior unsecured ratings to Ba2 from Ba3 with an expected positive outlook by Moody’s Investors Service. The change reflects the improvements in the country’s debt burden and debt affordability metrics during 2022 thanks to a massive increase in oil and gas revenue. This resulted in an elevation in the sovereign’s resilience against potential shocks, according to a report from the bond credit rating firm. “The positive outlook captures the prospect that the improvements in the government’s debt metrics will be sustained over the next few years, despite lower oil prices, through the maintenance of spending discipline and further implementation of fiscal and structural reforms,” according to Moody’s. Oman’s spending restraint and its decision to use the surplus and previously accumulated financial buffers to service its debt demonstrates the country’s improving track record of fiscal policy effectiveness and governance strength, the report stated. Moody’s rationale behind the upgrade is the increase in global oil demand and prices which generated a windfall of revenue for Oman, turning its fiscal deficit of 3.2 percent of gross domestic product in 2021 to a surplus of 3.4 percent in 2022. The government used the surplus to pay down more than 15 percent of its outstanding debt during the course of 2022. As a result, the debt burden declined to 40 percent of GDP last year from 61 percent the year before. “Moody’s assesses that the government’s change in the conduct of fiscal policy during periods of high or rising oil prices denotes an improvement in fiscal policy effectiveness and governance that will further support Oman’s credit profile in the medium to long term,” the report stated. Moody’s assumes that Oman’s fiscal improvement will likely sustain over the next few years. The report further indicated that the country’s local and foreign currency ceilings were raised by “one notch” as a result of the sovereign issuer rating upgrade. “The local currency country ceiling at Baa3, two notches above the sovereign issuer rating, incorporates the economy’s heavy reliance on a single revenue source, the government’s large economic footprint, and Oman’s track record of high external imbalances, partly mitigated by predictable institutions and moderate political risk,” the report added. “The foreign currency country ceiling at Ba1, one notch below the local currency ceiling, reflects relatively modest transfer and convertibility risks, supported by the sovereign’s robust foreign-currency buffers and Oman’s track record improving fiscal policy effectiveness, set against its high, albeit declining, level of external indebtedness,” according to the report.