According to Fitch Ratings, Oman plans to gradually reduce its total debt to about 30% of GDP by 2025 and 2026. To achieve this goal, the Gulf state will continue to access the debt capital market (DCM). While the first quarter of the year saw issuance of USD 1.05 billion, the total amount of DCM issued in 2024 was USD 10.3 billion, up 61.4%.
In addition to continuing to face local difficulties, the ratings agency further stated that the sultanate’s DCM is still among the smallest in the Gulf region and is not immune to the general slowdown in primary market dollar issuance and the ongoing global uncertainty.
According to the report, Oman has limited private sector options and primarily draws on banks, rather than a broader spectrum of investors. Additionally, there is little activity or trading in debt that is valued in the local currency.
“The Omani DCM is still developing…It faces issues such as limited private sector issuance, investor base concentrated with banks, shallow Omani rial market and low secondary market liquidity,” the ratings agency said.
Additionally, according to Fitch, sukuk continues to dominate the funding mix, making up 63.4% of the DCM issuance. As of 2024, the remaining portion was made up of conventional bonds, except for treasury bills. Fitch assigned a BB+ rating to approximately USD 7.2 billion in outstanding Omani sukuk during the first three months of the year.
More than half (55.2%) of the sukuk were owned by corporations, whereas sovereigns owned 44.8%. The issuance of sukuk increased by 124 points to USD 2.09 billion last year, surpassing that of conventional bonds, which also increased by 45 points to USD 7.04 billion.
In 2025, the Omani government hopes to raise USD 1.09 billion from the local market. According to the Ministry of Finance, USD 6.3 billion will be needed for financing this year, of which 53.2% will come from external debt, 30.5% from local borrowing, and 16.3% will come from reserve withdrawals.
Oman recorded a fiscal surplus and moderate economic growth in 2024, driven by higher oil revenues and an expansion in non-oil activities, official data from the National Centre for Statistics and Information (NCSI) showed.
Meanwhile, the Sultanate’s gross domestic product (GDP) at constant prices grew by 1.6% year-on-year to RO 37.7 billion (USD 98.1 billion), while GDP at current prices fell by 3.0% to RO 40.7 billion, largely due to lower oil activity. Non-oil activities expanded by 3.7%, led by a strong performance in manufacturing (+8.5%), wholesale and retail trade (+7.1%), and financial services (+3.5%). Oil-related activities declined 3.6% on a real basis, as crude output and prices softened.
While manufacturing value added rose on the back of refined petroleum products and basic chemicals, the construction sector showed modest gains. Average daily crude production in January and February 2025 stood at 987,000 barrels, down 1.4% from the same period in 2024. However, the average price of Omani crude rose 1.0% to USD 72.8 per barrel in February.
Natural gas production, including imports, rose 3.0% in the first two months of 2025, driven by increased use in oil fields (+24.2%). Government revenues rose 4% to RO 10.2 billion by end-October 2024, supported by oil revenues (+11%), goods and services taxes (+18%), and relatively stable non-oil receipts. Public spending increased 8% to RO 9.68 billion, including higher allocations for development projects and sectoral subsidies. The overall budget recorded a surplus of RO 520 million, compared to RO 830 million in the same period of 2023.
Merchandise exports rose 6.8% to RO 24.2 billion in 2024, with oil and gas exports up 18.4% to RO 16.3 billion. However, non-oil exports fell sharply by 16.3%, with declines across minerals, chemicals, and live animals. Imports, meanwhile, climbed 12.1% to RO 16.7 billion, reflecting higher demand for electrical machinery, mineral products, and transport equipment.
Foreign direct investment (FDI) reached RO 30.04 billion by the end of 2024, up 18% from the previous year. The United Kingdom remained the top investor, contributing RO 15.3 billion (+22.9%), followed by the United States (RO 7.67 billion) and China (RO 1.29 billion).