RIYADH: Reflecting Oman’s commitment to fiscal stability, US-based Fitch Ratings upgraded the Gulf nation’s long-term foreign currency issuer default rating to “BB+” from “BB.” According to the agency, the Omani government’s dedication to implementing measures to maintain financial security was a key factor contributing to the advancement. This promise comes in response to the challenging scenario of the oil price’s breakeven point, which has declined from $80-90 per barrel between 2017 and 2019 to less than $70 per barrel in 2023. The agency also noted that the upgrade implied that the government would not backtrack on recent fiscal consolidation measures. “The reduction of Oman’s fiscal breakeven price to below $70 per barrel over our forecast horizon from $80-$90 over 2017-19 significantly reduces vulnerability to oil price swings, although risks remain,” said Fitch Ratings in its report. As for falling debt, the analysis said that Oman continues to pre-pay some of this deficit, using the budget surplus from high oil prices, expecting the numbers to decrease by about 8 percent in nominal value in 2023. “The Petroleum Reserve Fund has not been used for these repayments and was over $2.5 billion in August 2023. Oman’s debt management has smoothed its debt profile, reducing the risk of liquidity pressures,” Fitch added in its report. The rating agency also indicated that lower external debt has eased external liquidity risks, although repayments prevented the accumulation of foreign assets. “We project sovereign net foreign assets ... to return to a positive position in 2023, after falling to -9 percent of gross domestic product in 2020, from 53 percent in 2014,” it said. Foreign exchange reserves will rise only modestly in 2023 as debt repayments continue to cover 3.3 months of current account payments, below the ‘BB’ median of 4.3 months, according to the document. Fitch also noted that renewable energy and hydrogen sector investments are expected to spur growth from 2025. Meanwhile, the state’s general budget will achieve a financial surplus of about 4.1 percent in 2023, 2.4 percent in 2024, and 1 percent in 2025. The report indicated that it expects public debt, as a ratio to GDP, to decline to about 36 percent during 2023 and to stabilize at 35 percent during 2024 and 2025, compared to previous forecasts that predicted this number would reach about 45 percent in 2023. The Omani government’s trend in managing public deficits and repaying some foreign loans prior to their maturity, taking advantage of additional revenues, was lauded by the rating agency, which also noted this reduces the risks of external financial liquidity pressures. Fitch expected the rate of net foreign assets to revert to its original positive standing and that foreign cash reserves would grow moderately during the remainder of 2023. It added that the country’s credit rating may go up if external public debt, as a ratio to GDP, continues declining and net sovereign foreign assets continue to improve.