403
Sorry!!
Error! We're sorry, but the page you were looking for doesn't exist.
Oman – Sovereign Ratings Affirmed; Outlook Remains Positive
(MENAFN- Capital Intelligence Ltd) 21 August 2026
Capital Intelligence Ratings (CI Ratings or CI) today announced that it has affirmed Oman’s Long-Term Foreign Currency Rating (LT FCR) and LT Local Currency Rating (LT LCR) at ‘BBB-’. At the same time, CI Ratings has affirmed the sovereign’s Short-Term (ST) FCR and ST LCR at ‘A3’. The Outlook for the ratings remains Positive.
Rating Drivers
The ratings reflect the improvement in the public finances, supported by the continued decline in central government debt levels and CI’s expectation that the central government will register a net creditor position in 2026, achieved through a combination of oil-financed surpluses, disciplined expenditure control, and active liability management. The latter has resulted in the retirement of expensive external obligations ahead of schedule and the lengthening of the maturity profile, and has been accompanied by a decline in the interest burden. The ratings also reflect the sovereign’s resilient shock-absorption capacity, supported by still high external buffers – despite the acute regional situation – and underpinned by accelerated reform implementation under Vision 2040. Efforts are ongoing to reduce the state’s footprint in the economy, deepen private sector participation in non-hydrocarbon industries, attract foreign direct investment (FDI), strengthen labour market resilience, and modernise capital markets.
The ratings are also supported by prudent economic management, the relative soundness of the banking system, and CI’s expectation that financial support for the sovereign would be forthcoming from other GCC countries in the event of need.
The ratings continue to be constrained by Oman’s exposure to very high geopolitical risk arising from the conflict between the US and Iran, although to a lesser degree than other GCC member states. The ratings are further constrained by the still comparatively low level of economic diversification, structural budgetary weaknesses – including a high reliance on hydrocarbon revenues and expenditure rigidities – an external current account position that is more sensitive to hydrocarbon prices than the budget, and moderate contingent liabilities arising from state-owned enterprises (SOEs).
The public finances remain strong, supported by continued fiscal consolidation efforts that aim to improve revenue mobilisation and rationalise current spending. The central government budget, which excludes investment income, is expected to post a surplus of 4.5% of GDP in 2026, compared to a deficit of 1.1% in 2025, supported by higher hydrocarbon revenues that are projected to offset further increase in capital spending. The central government budget is expected to remain fairly strong in 2027-28, with a projected average surplus of 3.2% of GDP. The broader central government position – which includes investment income – has been in surplus for the past four years and is expected to continue registering strong surpluses averaging 5% of GDP in 2026-28.
The government is expected to continue pursuing fiscal consolidation over the coming years, with the progressive implementation of the tax administration modernisation programme aiming to close the tax compliance gap by 50% over four years. Additionally, the new income tax law is expected to raise non-hydrocarbon revenues by approximately 0.3% of non-hydrocarbon GDP annually from 2028. Moreover, the introduction of a 15% domestic top-up tax on multinational companies will further boost non-hydrocarbon revenues and improve the budget structure.
Reflecting favourable debt dynamics and proactive debt management, central government debt declined further to 34.5% of GDP in 2025, from 35.4% in 2024. Moving forward, CI expects central government debt to decline to 33.2% of GDP in 2026 and 31.8% in 2027, supported by primary budget surpluses (excluding investment income) averaging 6.3% of GDP in 2026-27. Interest costs are expected to decline to an average of 6.0% of budget revenues in 2026-27, from 7.3% in 2025.
The repayment of expensive external obligations and liability management operations have improved the debt structure. However, the debt stock remains predominantly foreign currency-denominated and largely held by non-residents, exposing the sovereign to adverse changes in external financing conditions. Liquidity risks are currently low, as gross central government debt is largely covered by central government financial assets. The latter include deposits with the central bank and local banks as well as the estimated liquid assets of the Oman Investment Authority (OIA).
Government contingent liabilities stemming from SOE debt remain a potential source of fiscal risk. SOE debt increased to around 32.9% of GDP in 2025, from 30.8% in 2024, due to higher project financing needs. CI notes that steps have been taken in recent years to reduce the debt (which peaked at 41.1% of GDP in 2021) and the OIA plans to divest of a further 30 entities under its control by 2030, which should further reduce government contingent liabilities. These liabilities are mostly implicit; explicit government guarantees are fairly low and are estimated to have declined to less than 4% of GDP in 2025.
Although the US-Israel war on Iran has disrupted regional trade and affected parts of Oman’s hydrocarbon export infrastructure, the net impact on the sovereign’s external accounts has so far been positive. Oman’s principal export terminals are located outside the Strait of Hormuz, allowing the Sultanate to maintain hydrocarbon exports while some regional peers have faced disruptions and higher freight and insurance costs. Oil production increased by 10.6% y-o-y in H1 26 to an average of 1.094 million barrels/day, while the realised crude price averaged USD80.9/barrel, 9.4% above the corresponding period of 2025 and well above the USD60.0 assumed in our previous review. According to the monthly bulletin of the National Centre of Statistics and Information, crude and condensate export receipts increased by around 8.4% y-o-y in the first five months of 2026. Higher import, freight, and marine insurance costs have partly offset these gains, but CI considers the overall impact on Oman’s external position to have been positive.
Reform implementation has remained strong in 2026, with the launch of the Eleventh Five-Year Development Plan (2026-30) providing a new medium-term framework for economic diversification, private sector development, FDI attraction, and labour market reform. Progress has also continued in strengthening domestic revenue mobilisation, including the modernisation of tax administration and preparations for the implementation of personal income tax, while the planned introduction of electronic invoicing should further improve tax compliance. The authorities have also strengthened the regulatory framework for capital markets through the implementation of the Executive Regulation of the Securities Law, supporting the development of alternative sources of financing and greater private sector participation. Continued implementation of the OIA’s divestment programme and broader structural reforms under Vision 2040 should gradually reduce the state’s footprint in the economy and support diversification. CI notes that persistent reform implementation helped to improve revenue mobilisation in 2025, with non-hydrocarbon revenues having accounted for 30.1% of total central government revenues, compared to 27.4% in 2024.
International liquidity remains high. Gross official reserves (which do not include the external liquid assets of the OIA) increased to USD19.5bn in June 2026, from USD19.4bn December 2025. Reserve adequacy is high, with official reserves of USD19.4bn in December 2025 providing approximately 324.0% coverage of external debt falling due in 2026 and 28.3% coverage of broad money (M2). The current account position is expected to post a surplus of 1.9% of GDP in 2026 (compared to a deficit of 1.7% in 2025), reflecting our assumption that higher oil prices will offset investment related imports.
The relatively sound financial condition of the Omani banking sector, which benefits from good capital buffers and a currently moderate stock of NPLs, is also a supporting factor for the ratings. Reliance on cross-border funding is also assessed as moderate, and concentration risk remains high, in common with many other banks in the GCC.
CI notes that the projections underpinning this rating action remain subject to an unusually elevated degree of uncertainty, principally reflecting the absence of a durable negotiated settlement between the US and Iran, and the risk of a renewed broad-scale military conflict. A more prolonged, intensified or geographically broader conflict than currently assumed in CI’s base case could materially adversely affect growth, public finances, external accounts and, therefore, sovereign creditworthiness.
Rating Outlook
The Positive Outlook indicates a better than even chance that that the ratings will be upgraded in the next 12 months. This is based on our expectation that ongoing structural reforms and increasing fiscal and external buffers will help to gradually reduce Oman’s vulnerability to hydrocarbon prices, improve revenue mobilisation, as well as further reduce fiscal risks from SOEs.
Rating Dynamics: Upside Scenario
The ratings could be upgraded by more than one notch in the next 12-24 months in the event of a larger than envisaged improvement in the public finances, particularly if supported by a significant reduction in the reliance on hydrocarbons and far greater non-oil revenue mobilisation.
Rating Dynamics: Downside Scenario
The ratings could be lowered by one notch in the next 12-24 months, should fiscal and external metrics deteriorate significantly (for example, due to a significant increase in geopolitical risk factors or a prolonged and sharp decline in oil prices or policy slippage).
Contact
Primary Analyst: Dina Ennab, Sovereign Analyst, E-mail: ...
Committee Chairperson: Morris Helal, Senior Credit Analyst
About the Ratings
The credit ratings have been issued by Capital Intelligence Ratings Ltd, P.O. Box 53585, Limassol 3303, Cyprus.
The ratings, rating outlook and accompanying analysis are based on public information. This may include information obtained from one or more of the following sources: national statistical agencies, central banks, government departments or agencies, government policy documents and statements, issuer bond documentation, supranational institutions, and international financial institutions.
CI considers the quality of information available on the rated entity to be satisfactory for the purposes of assigning and maintaining credit ratings, but does not audit or independently verify information published by national authorities and other official sector institutions.
The principal methodology used to determine the ratings is the Sovereign Rating Methodology dated September 2018. For the methodology and our definition of default see Information on rating scales and definitions and the time horizon of rating outlooks can be found at Historical performance data, including default rates, are available from a central repository established by ESMA (CEREP) at
This rating action follows a scheduled periodic (semi-annual) review of the rated entity. Ratings on the entity were first released in December 1996. The ratings were last updated in February 2026. The ratings and rating outlook were disclosed to the rated entity prior to publication and were not amended following that disclosure.
The ratings have been initiated by CI. The following scheme is therefore applicable in accordance with EU regulatory guidelines.
Unsolicited Credit Rating
With Rated Entity or Related Third Party Participation:No
With Access to Internal Documents:No
With Access to Management: No
Conditions of Use and General Limitations
The information contained in this publication including opinions, views, data, material and ratings may not be copied, distributed, altered or otherwise reproduced, in whole or in part, in any form or manner by any person except with the prior written consent of Capital Intelligence Ratings Ltd (hereinafter “CI”). All information contained herein has been obtained from sources believed to be accurate and reliable. However, because of the possibility of human or mechanical error or other factors by third parties, CI or others, the information is provided “as is” and CI and any third-party providers make no representations, guarantees or warranties whether express or implied regarding the accuracy or completeness of this information.
Without prejudice to the generality of the foregoing, CI and any third-party providers accept no responsibility or liability for any losses, errors or omissions, however caused, or for the results obtained from the use of this information. CI and any third-party providers do not accept any responsibility or liability for any damages, costs, expenses, legal fees or losses or any indirect or consequential loss or damage including, without limitation, loss of business and loss of profits, as a direct or indirect consequence of or in connection with or resulting from any use of this information.
Credit ratings and credit-related analysis issued by CI are current opinions as of the date of publication and not statements of fact. CI’s credit ratings provide a relative ranking of credit risk. They do not indicate a specific probability of default over any given time period. The ratings do not address the risk of loss due to risks other than credit risk, including, but not limited to, market risk and liquidity risk. CI’s ratings are not a recommendation to purchase, sell, or hold any security and do not comment as to market price or suitability of any security for a particular investor. Further information on the attributes and limitations of ratings can be found in the applicable methodology or else at
The information contained in this publication does not constitute investment or financial advice. As the ratings and analysis are opinions of CI they should be relied upon to a limited degree and users of this information should conduct their own risk assessment and due diligence before making any investment or other business decisions.
Copyright © Capital Intelligence Ratings Ltd 2026
Capital Intelligence Ratings (CI Ratings or CI) today announced that it has affirmed Oman’s Long-Term Foreign Currency Rating (LT FCR) and LT Local Currency Rating (LT LCR) at ‘BBB-’. At the same time, CI Ratings has affirmed the sovereign’s Short-Term (ST) FCR and ST LCR at ‘A3’. The Outlook for the ratings remains Positive.
Rating Drivers
The ratings reflect the improvement in the public finances, supported by the continued decline in central government debt levels and CI’s expectation that the central government will register a net creditor position in 2026, achieved through a combination of oil-financed surpluses, disciplined expenditure control, and active liability management. The latter has resulted in the retirement of expensive external obligations ahead of schedule and the lengthening of the maturity profile, and has been accompanied by a decline in the interest burden. The ratings also reflect the sovereign’s resilient shock-absorption capacity, supported by still high external buffers – despite the acute regional situation – and underpinned by accelerated reform implementation under Vision 2040. Efforts are ongoing to reduce the state’s footprint in the economy, deepen private sector participation in non-hydrocarbon industries, attract foreign direct investment (FDI), strengthen labour market resilience, and modernise capital markets.
The ratings are also supported by prudent economic management, the relative soundness of the banking system, and CI’s expectation that financial support for the sovereign would be forthcoming from other GCC countries in the event of need.
The ratings continue to be constrained by Oman’s exposure to very high geopolitical risk arising from the conflict between the US and Iran, although to a lesser degree than other GCC member states. The ratings are further constrained by the still comparatively low level of economic diversification, structural budgetary weaknesses – including a high reliance on hydrocarbon revenues and expenditure rigidities – an external current account position that is more sensitive to hydrocarbon prices than the budget, and moderate contingent liabilities arising from state-owned enterprises (SOEs).
The public finances remain strong, supported by continued fiscal consolidation efforts that aim to improve revenue mobilisation and rationalise current spending. The central government budget, which excludes investment income, is expected to post a surplus of 4.5% of GDP in 2026, compared to a deficit of 1.1% in 2025, supported by higher hydrocarbon revenues that are projected to offset further increase in capital spending. The central government budget is expected to remain fairly strong in 2027-28, with a projected average surplus of 3.2% of GDP. The broader central government position – which includes investment income – has been in surplus for the past four years and is expected to continue registering strong surpluses averaging 5% of GDP in 2026-28.
The government is expected to continue pursuing fiscal consolidation over the coming years, with the progressive implementation of the tax administration modernisation programme aiming to close the tax compliance gap by 50% over four years. Additionally, the new income tax law is expected to raise non-hydrocarbon revenues by approximately 0.3% of non-hydrocarbon GDP annually from 2028. Moreover, the introduction of a 15% domestic top-up tax on multinational companies will further boost non-hydrocarbon revenues and improve the budget structure.
Reflecting favourable debt dynamics and proactive debt management, central government debt declined further to 34.5% of GDP in 2025, from 35.4% in 2024. Moving forward, CI expects central government debt to decline to 33.2% of GDP in 2026 and 31.8% in 2027, supported by primary budget surpluses (excluding investment income) averaging 6.3% of GDP in 2026-27. Interest costs are expected to decline to an average of 6.0% of budget revenues in 2026-27, from 7.3% in 2025.
The repayment of expensive external obligations and liability management operations have improved the debt structure. However, the debt stock remains predominantly foreign currency-denominated and largely held by non-residents, exposing the sovereign to adverse changes in external financing conditions. Liquidity risks are currently low, as gross central government debt is largely covered by central government financial assets. The latter include deposits with the central bank and local banks as well as the estimated liquid assets of the Oman Investment Authority (OIA).
Government contingent liabilities stemming from SOE debt remain a potential source of fiscal risk. SOE debt increased to around 32.9% of GDP in 2025, from 30.8% in 2024, due to higher project financing needs. CI notes that steps have been taken in recent years to reduce the debt (which peaked at 41.1% of GDP in 2021) and the OIA plans to divest of a further 30 entities under its control by 2030, which should further reduce government contingent liabilities. These liabilities are mostly implicit; explicit government guarantees are fairly low and are estimated to have declined to less than 4% of GDP in 2025.
Although the US-Israel war on Iran has disrupted regional trade and affected parts of Oman’s hydrocarbon export infrastructure, the net impact on the sovereign’s external accounts has so far been positive. Oman’s principal export terminals are located outside the Strait of Hormuz, allowing the Sultanate to maintain hydrocarbon exports while some regional peers have faced disruptions and higher freight and insurance costs. Oil production increased by 10.6% y-o-y in H1 26 to an average of 1.094 million barrels/day, while the realised crude price averaged USD80.9/barrel, 9.4% above the corresponding period of 2025 and well above the USD60.0 assumed in our previous review. According to the monthly bulletin of the National Centre of Statistics and Information, crude and condensate export receipts increased by around 8.4% y-o-y in the first five months of 2026. Higher import, freight, and marine insurance costs have partly offset these gains, but CI considers the overall impact on Oman’s external position to have been positive.
Reform implementation has remained strong in 2026, with the launch of the Eleventh Five-Year Development Plan (2026-30) providing a new medium-term framework for economic diversification, private sector development, FDI attraction, and labour market reform. Progress has also continued in strengthening domestic revenue mobilisation, including the modernisation of tax administration and preparations for the implementation of personal income tax, while the planned introduction of electronic invoicing should further improve tax compliance. The authorities have also strengthened the regulatory framework for capital markets through the implementation of the Executive Regulation of the Securities Law, supporting the development of alternative sources of financing and greater private sector participation. Continued implementation of the OIA’s divestment programme and broader structural reforms under Vision 2040 should gradually reduce the state’s footprint in the economy and support diversification. CI notes that persistent reform implementation helped to improve revenue mobilisation in 2025, with non-hydrocarbon revenues having accounted for 30.1% of total central government revenues, compared to 27.4% in 2024.
International liquidity remains high. Gross official reserves (which do not include the external liquid assets of the OIA) increased to USD19.5bn in June 2026, from USD19.4bn December 2025. Reserve adequacy is high, with official reserves of USD19.4bn in December 2025 providing approximately 324.0% coverage of external debt falling due in 2026 and 28.3% coverage of broad money (M2). The current account position is expected to post a surplus of 1.9% of GDP in 2026 (compared to a deficit of 1.7% in 2025), reflecting our assumption that higher oil prices will offset investment related imports.
The relatively sound financial condition of the Omani banking sector, which benefits from good capital buffers and a currently moderate stock of NPLs, is also a supporting factor for the ratings. Reliance on cross-border funding is also assessed as moderate, and concentration risk remains high, in common with many other banks in the GCC.
CI notes that the projections underpinning this rating action remain subject to an unusually elevated degree of uncertainty, principally reflecting the absence of a durable negotiated settlement between the US and Iran, and the risk of a renewed broad-scale military conflict. A more prolonged, intensified or geographically broader conflict than currently assumed in CI’s base case could materially adversely affect growth, public finances, external accounts and, therefore, sovereign creditworthiness.
Rating Outlook
The Positive Outlook indicates a better than even chance that that the ratings will be upgraded in the next 12 months. This is based on our expectation that ongoing structural reforms and increasing fiscal and external buffers will help to gradually reduce Oman’s vulnerability to hydrocarbon prices, improve revenue mobilisation, as well as further reduce fiscal risks from SOEs.
Rating Dynamics: Upside Scenario
The ratings could be upgraded by more than one notch in the next 12-24 months in the event of a larger than envisaged improvement in the public finances, particularly if supported by a significant reduction in the reliance on hydrocarbons and far greater non-oil revenue mobilisation.
Rating Dynamics: Downside Scenario
The ratings could be lowered by one notch in the next 12-24 months, should fiscal and external metrics deteriorate significantly (for example, due to a significant increase in geopolitical risk factors or a prolonged and sharp decline in oil prices or policy slippage).
Contact
Primary Analyst: Dina Ennab, Sovereign Analyst, E-mail: ...
Committee Chairperson: Morris Helal, Senior Credit Analyst
About the Ratings
The credit ratings have been issued by Capital Intelligence Ratings Ltd, P.O. Box 53585, Limassol 3303, Cyprus.
The ratings, rating outlook and accompanying analysis are based on public information. This may include information obtained from one or more of the following sources: national statistical agencies, central banks, government departments or agencies, government policy documents and statements, issuer bond documentation, supranational institutions, and international financial institutions.
CI considers the quality of information available on the rated entity to be satisfactory for the purposes of assigning and maintaining credit ratings, but does not audit or independently verify information published by national authorities and other official sector institutions.
The principal methodology used to determine the ratings is the Sovereign Rating Methodology dated September 2018. For the methodology and our definition of default see Information on rating scales and definitions and the time horizon of rating outlooks can be found at Historical performance data, including default rates, are available from a central repository established by ESMA (CEREP) at
This rating action follows a scheduled periodic (semi-annual) review of the rated entity. Ratings on the entity were first released in December 1996. The ratings were last updated in February 2026. The ratings and rating outlook were disclosed to the rated entity prior to publication and were not amended following that disclosure.
The ratings have been initiated by CI. The following scheme is therefore applicable in accordance with EU regulatory guidelines.
Unsolicited Credit Rating
With Rated Entity or Related Third Party Participation:No
With Access to Internal Documents:No
With Access to Management: No
Conditions of Use and General Limitations
The information contained in this publication including opinions, views, data, material and ratings may not be copied, distributed, altered or otherwise reproduced, in whole or in part, in any form or manner by any person except with the prior written consent of Capital Intelligence Ratings Ltd (hereinafter “CI”). All information contained herein has been obtained from sources believed to be accurate and reliable. However, because of the possibility of human or mechanical error or other factors by third parties, CI or others, the information is provided “as is” and CI and any third-party providers make no representations, guarantees or warranties whether express or implied regarding the accuracy or completeness of this information.
Without prejudice to the generality of the foregoing, CI and any third-party providers accept no responsibility or liability for any losses, errors or omissions, however caused, or for the results obtained from the use of this information. CI and any third-party providers do not accept any responsibility or liability for any damages, costs, expenses, legal fees or losses or any indirect or consequential loss or damage including, without limitation, loss of business and loss of profits, as a direct or indirect consequence of or in connection with or resulting from any use of this information.
Credit ratings and credit-related analysis issued by CI are current opinions as of the date of publication and not statements of fact. CI’s credit ratings provide a relative ranking of credit risk. They do not indicate a specific probability of default over any given time period. The ratings do not address the risk of loss due to risks other than credit risk, including, but not limited to, market risk and liquidity risk. CI’s ratings are not a recommendation to purchase, sell, or hold any security and do not comment as to market price or suitability of any security for a particular investor. Further information on the attributes and limitations of ratings can be found in the applicable methodology or else at
The information contained in this publication does not constitute investment or financial advice. As the ratings and analysis are opinions of CI they should be relied upon to a limited degree and users of this information should conduct their own risk assessment and due diligence before making any investment or other business decisions.
Copyright © Capital Intelligence Ratings Ltd 2026
Legal Disclaimer:
MENAFN provides the
information “as is” without warranty of any kind. We do not accept any
responsibility or liability for the accuracy, content, images, videos,
licenses, completeness, legality, or reliability of the information
contained in this article. If you have any complaints or copyright issues
related to this article, kindly contact the provider above.
Comments
No comment