OMAN

RISK RATING
Elevated
Default High Risk Score 4.50
Normal Average 2.92
Weighted Average 2.31
RISK RATING HISTORY
RISK RATING SCALE

Risk Rating Scale

Severe: 8.0 to 10
High: 6.0 to 7.9
Elevated: 4.0 to 5.9
Moderate: 2.0 to 3.9
Low: 0.0 to 1.9
EXCHANGE RATE
Country Outlook

Oman’s Sultan Haitham bin Tariq is an absolute monarch, yet he faces growing pressure to involve citizens in decision-making processes as he raises taxes for the first time and cuts public expenditure to stabilise debt. Oman is a relatively small crude oil producer burdened by high levels of debt, making it more vulnerable to oil price swings than most of its wealthier Gulf neighbours. To fill its large budget deficit, Oman will impose value added tax in 2021 and income tax from 2022. Meanwhile, public debt is expected to reach 80 percent of gross domestic product in 2020, 16 times more than six years previously. Gulf states, such as Qatar, provide financial assistance, although such support comes with foreign policy conditions.

  • Oman is an absolute monarchy, although pressure is mounting to pass democratic reforms. Haitham bin Tariq has ruled since 2020 when he succeeded long-time sultan Qaboos bin Said al Said, who implemented a policy of modernisation, economic reforms, and ended Oman’s international isolation. However, Qaboos’ rule was funded by high debt and marked by repression of political critics and rights activists. Sultan Haitham is introducing taxes for the first time to fund the cash-strapped state, while also reforming the public administration. In 2020. the country’s sovereign wealth fund took over all state-owned companies and announced the restructuring of 15 boards of directors. However, pro-reform activists have said the implementation of new taxes should translate into the right for taxpayers to express critical views and challenge public policies.
  • The risk of unrest is rising as the sultan faces calls for greater political representation and the country suffers from an economic crisis. Sultan Qaboos lacks the financial ability to allocate public resources to buy social peace, unlike his predecessor. Security agencies like the Internal Security Service monitor social media and frequently detain political critics and rights activists. Since the beginning of the ‘Omani Spring’ in January 2011, several serious violations of civil rights have been reported, amounting to a critical deterioration of the human rights situation. Oman is among the very few Arab countries that have maintained friendly ties with Iran, while also keeping ties to Qatar. Oman is one of the most militarised states in the world, with one of the highest military spending per GDP ratios globally.
  • Local and international debt markets play a crucial role in keeping Oman funded through the pandemic. Such funding includes development bonds, sukuk, and a USD 2 billion bridge loan secured in 2020 with a group of international and regional banks. The loan, which will be repaid with money raised from an international bond issuance, will bolster state coffers hit by low oil prices and the economic downturn caused by the coronavirus crisis. Oman’s fiscal deficit is set to widen to 16.9 percent of GDP in 2020 from a 7 percent deficit in 2019. It has over USD 10 billion in external debt due in 2021 and 2022 that could add pressure to foreign exchange reserves if it is not rolled over.
CUMULATIVE AND DAILY COVID-19 INFECTIONS AND DEATH RATE
INTERNATIONAL MONETARY FUND | DATAMAPPER
Risk Perils
Political Instability
1.5
Expropriation, Nationalisation, Confiscation & Deprivation
1.5
Contract Frustration & Breach
3.4
Taxation
3.0
Bribery & Corruption
3.0
Regulatory Burden
3.0
Strikes, Riots & Civil Commotion
2.8
Security
2.0
Sovereign Default
4.5
Economic Volatiliy
4.5

Risk Rating Scale (small)

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