World

Fitch downgrades Oman for second time in 2020 on fiscal woes

Bloomberg August 18 | Updated on August 18, 2020

Cuts outlook to negative; sees fiscal deficit at about 20% of GDP in 2020

Oman received its second downgrade this year from Fitch Ratings, a decision it said reflects the continued erosion of the country’s fiscal and external balance sheets.

Fitch lowered Oman’s sovereign rating to BB- from BB, according to a statement on Monday. The outlook is negative. The rating company now forecasts Oman’s fiscal deficit at nearly 20 per cent of gross domestic product in 2020, compared with about 8 per cent in 2019.

We expect fiscal reform and higher oil prices to narrow the fiscal deficit to the mid-single digits by 2022, but there are considerable downside risks to this forecast. Government debt projected to increase to over 80 per cent of GDP this year, from 60 per cent in 2019. The coming three years will be a critical test of the funding flexibility that Oman has displayed in the past, and a steep maturity schedule will keep Oman’s funding needs large beyond that, even as the fiscal deficit is reined in, Fitch said.

Published on August 18, 2020

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