Oman's return to investment grade is a national milestone

Zawya

14-07-2025

There are few moments in a nation's economic journey that genuinely signal a turning point. Oman's recent upgrade by Moody's to investment grade status — after nearly a decade below that line — is one of those moments.
On July 11, 2025, Moody's Investors Service officially lifted the Sultanate's sovereign credit rating from Ba1 to Baa3, restoring the country's position among the world's most trusted borrowers. For the average citizen, that may sound technical. But for those tracking Oman's economic transformation over the past few years, it reads like a stamp of international confidence — earned through persistence, policy reform, and national vision.
Unlike flashy economic turnarounds that make headlines with sudden oil booms or mega projects, Oman's comeback has been quiet, deliberate, and disciplined. Since the oil price crash of 2014, which rattled public finances across the Gulf, Oman has been steadily fixing its house — reducing debt, rationalising spending, and making every rial count.
By the end of 2024, Oman had cut its public debt ratio to 35.5% of GDP, down from 37.5% just a year before — and significantly below the alarming levels of the early 2020s. More importantly, the government's grip on public spending has tightened. Public expenditure, which averaged 41% of GDP between 2016 and 2020, now sits at a leaner 29%.
Even more impressive is the drop in Oman's fiscal break-even oil price — the point at which oil revenues cover government spending. From a risky USD 84 per barrel just a few years ago, that number has fallen to USD 70. That shift means Oman is less vulnerable to sudden oil market swings — a critical safeguard in a turbulent global economy.
And the results don't stop there. The cost of debt servicing, which used to consume 9% of total revenues in 2021, was reduced to 7.2% in 2024. Meanwhile, real GDP grew by 1.7%, inflation stayed under control at 0.7%, and the country recorded both a fiscal surplus (2.8% of GDP) and a current account surplus (2.1%).
These are not abstract achievements. They are the tangible outcomes of a government choosing the long road over the easy one — resisting quick fixes and instead building economic resilience brick by brick.
Moody's didn't simply reward good numbers. The upgrade reflects a deeper shift: a belief that Oman's economic direction is sustainable and credible. That belief matters.
Credit ratings influence how much governments pay to borrow money, how foreign investors assess risk, and how global markets perceive long-term economic health. Being rated investment grade means Oman is once again seen as a safe, stable, and forward-looking country — not just within the Gulf, but on the international stage.
The recognition also brings renewed investor interest. From sovereign bond markets to foreign direct investment, Oman is now better placed to secure funding on more favourable terms — essential for pushing forward with large-scale infrastructure, energy transition, and industrial diversification plans.
It would be easy to attribute this upgrade to a good year of oil prices or a temporary fiscal surplus. But that would miss the larger picture. Oman's return to investment grade is rooted in Vision 2040, the national blueprint launched to steer the Sultanate toward a more diversified, competitive, and inclusive economy.
That vision has translated into real policy — from restructuring public finances and reforming state-owned enterprises, to promoting SMEs, tourism, logistics, green hydrogen, and technology. The fruits of these efforts are now beginning to show — not just in the rating agencies' assessments, but in the underlying fundamentals of the economy.
In fact, the Moody's report echoes a message Omani policymakers have been emphasising for years: fiscal discipline, when paired with strategic diversification, works. It strengthens credibility, lowers risk, and creates space for long-term growth.
Despite this success, Oman cannot afford to let its guard down. Moody's made clear that the road ahead will require continued fiscal prudence and faster progress in reducing reliance on oil revenues. The non-oil primary deficit — a key measure of underlying sustainability — still needs attention. Likewise, non-oil growth must become more robust to cushion any future shocks.
This is where the next chapter begins. Investment grade should not be treated as a finish line, but as a launchpad. It gives Oman the global trust it needs to attract capital — but now the focus must shift to ensuring that growth is broad-based, digitally enabled, climate-conscious, and youth-driven.
Perhaps the most important takeaway from this upgrade is not what it says about global markets — but what it says about Oman itself.
In a region often viewed through the lens of oil dependency, Oman is charting a different course — one grounded in responsibility, reform, and realism. The Moody's upgrade is a recognition of that quiet confidence — and a reminder that economic credibility isn't claimed through promises; it's earned through choices.
For investors, this is an invitation to look again at Oman. For citizens, it's a reassurance that the country is on firmer ground. And for policymakers, it is a moment of validation — and a reminder to keep going.
Because in the end, ratings may change — but national vision endures.
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