Oman received its second downgrade this year from Fitch Ratings because of what it called the “continued erosion” of the country’s fiscal and external balance sheets.
Fitch lowered Oman’s sovereign rating one notch to BB-, three steps below investment grade and on par with Brazil, Turkey and Bangladesh, according to a statement on Monday. The outlook is negative. Fitch’s latest downgrade brings its ranking of Oman to the same level as that of Moody’s Investors Service and S&P Global Ratings.
Even before the virus outbreak and declines in oil prices, Oman was already among the most vulnerable economies in the six-nation Gulf Cooperation Council. It’s now on track to run a budget shortfall that Fitch estimates at nearly 20% of gross domestic product in 2020, compared with about 8% 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,” Fitch analysts including Krisjanis Krustins said in the report.
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