Moody’s on Friday downgraded Oman’s long-term bond ratings to two notches above junk territory citing limited progress in addressing the nation’s vulnerabilities to the weak oil price environment.
The ratings agency lowered its outlook on Oman’s longer-term bond rating to Baa2 from Baa1 and changed its outlook to negative from stable.
The agency said that Oman’s fiscal performance last year and in the first few months of 2017 were weaker than was suggested by the changes in oil price and the government’s reform announcements.
Moody’s estimates Oman’s fiscal deficit reached 18.7 per cent of GDP last year, up sharply from 14.8 per cent in 2015.
The agency said, "While the government has started to implement fiscal consolidation measures, Moody’s believes the challenges are significant and that the plan is unlikely to address structural issues — the high dependence of Oman’s government finances on oil revenues and government spending dominated by current spending."
Meanwhile, Moody’s pushed Bahrain deeper into junk territory on Friday as it lowered the country’s long-term issuer rating by two notches to B1, from Ba2, and maintained the negative outlook.
