Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

Fitch: Oman Could Record Budget Deficit in 2025 if Oil Falls to $70

Wed 17 Apr 2024 | 09:00 PM
US-based international credit rating agency Fitch Ratings (File Photo)
US-based international credit rating agency Fitch Ratings (File Photo)
Taarek Refaat

Fitch Expects Oman to Record Budget Deficit in 2025 if oil falls to $70

Fitch expects that Oman will return to recording a budget deficit with government debt rising marginally if Brent crude declines to $70 per barrel in 2025 and $65 per barrel in the following years.

Fitch said that these estimates come within its basic vision regarding the Sultanate, which raised its rating to “BB+” with a stable outlook last September, which reflects a structural improvement in the oil break-even price due to the financial reforms undertaken by the country, and a reduction in its vulnerability to future shocks and the use of strong oil revenues to repay debt.

According to Fitch estimates, the break-even price of Brent crude in Oman’s budget during the years 2023 and 2024 is between $71 and $75 per barrel, declining from $85 to $111 per barrel in the period between 2013 and 2018.

The Sultanate's government debt declined to 36.2% of GDP by the end of last year from 67.9% in 2020.

However, it pointed out that the Sultanate's financial position and external reserves are still vulnerable to fluctuations in oil and gas prices.

Further improvement in structural indicators, such as the break-even price of a barrel of oil in the budget and the primary non-oil deficit of non-oil GDP, which indicates greater resilience to the decline in oil and gas prices, could help the it regain an investment-worthy rating.