Moody's Investors Service downgraded the long-term issuer and senior unsecured bond ratings of the Oman government by a notch to Baa3, citing larger fiscal deficits and the ongoing weakening of its economy on the back of subdued growth in the coming years.
“The key driver of the downgrade is Moody's expectation that Oman's fiscal and external metrics will continue to weaken, in part reflecting institutional and policy constraints,” Moody’s said in a statement on Saturday. “In the absence of significant measures to narrow the fiscal and current account deficits beyond the current plans, Oman's capacity to absorb potential shocks would erode further.”
Moody's forecasts Oman’s fiscal deficit will remain at 5-7 per cent of GDP in the next five years. The agency projects the government’s debt burden will exceed 50 per cent of GDP by 2019 and rise above 60 per cent by 2021, up from 40.5 per cent at end-2017. The affordability of government debt will also weaken, with interest payments absorbing 8.4 per cent of government revenues by 2019 compared with around 3.8 per cent in 2017.
The Omani government, which sold $5 billion worth of bonds 12 months ago, tapped the debt markets again in January via a $6.5bn bond, its largest ever. Oman, the biggest Middle Eastern oil producer outside Opec, is trying to diversify its economy and cut its dependence on oil revenues. However the Arabian Gulf state doesn’t have access to the large cash buffers enjoyed by some of its GCC peers, and therefore has to rely more heavily on capital markets to plug fiscal deficits.
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The government earlier this year said it plans to finance 84 per cent of its 2018 fiscal deficit - or 2.5bn Omani rials ($6.5bn) - via domestic and foreign borrowings, with remaining 500m rial deficit being serviced via drawdowns of reserves.
Oil proceeds make up about 70 per cent of the Oman’s revenue. The decline in oil prices has forced Muscat to cut spending and privatise some state assets. The government, which announced an expansionary budget earlier this year, plans to sell stakes in the at least six state-owned entities to raise additional finances.
But planned expenditure cuts and additional revenue-raising measures will only narrow the deficit to a limited extent, according to Moody’s. Oman's large public sector wage bill – which accounts for 12 per cent of GDP and 27 per cent of total expenditure – together with increases in social spending over the past seven years, pose significant policy hurdles to faster fiscal consolidation.
"While the government aims to keep the civil servants' wages and benefits bill broadly unchanged in nominal terms over the next few years, Moody's does not foresee a significant nominal reduction of non-interest government spending over the medium term," the agency noted.
Real GDP expansion will remain subdued in the coming years, with growth in the non-hydrocarbon sector constrained by the government's efforts to rationalise spending, Moody's predicted.
The sultanate in January said it expects GDP to expand by at least 3 per cent this year, supported by the recovery in oil prices and its diversification drive. Oman’s growth forecast is in line with that of the IMF, which estimates its GDP will grow by 3.1 per cent in 2018, compared with 2.5 per cent in 2017.
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Engine: Direct injection 4-cylinder 1.4-litre
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Tips from the expert
Dobromir Radichkov, chief data officer at dubizzle and Bayut, offers a few tips for UAE residents looking to earn some cash from pre-loved items.
- Sellers should focus on providing high-quality used goods at attractive prices to buyers.
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SPECS
Engine: Two-litre four-cylinder turbo
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MATCH INFO
Champions League quarter-final, first leg
Manchester United v Barcelona, Wednesday, 11pm (UAE)
Match on BeIN Sports
Business Insights
- Canada and Mexico are significant energy suppliers to the US, providing the majority of oil and natural gas imports
- The introduction of tariffs could hinder the US's clean energy initiatives by raising input costs for materials like nickel
- US domestic suppliers might benefit from higher prices, but overall oil consumption is expected to decrease due to elevated costs
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The flights: South African Airways flies from Dubai International Airport with a stop in Johannesburg, with prices starting from around Dh4,000 return. Emirates can get you there with a stop in Lusaka from around Dh4,600 return.
The details: Visas are available for 247 Zambian kwacha or US$20 (Dh73) per person on arrival at Livingstone Airport. Single entry into Victoria Falls for international visitors costs 371 kwacha or $30 (Dh110). Microlight flights are available through Batoka Sky, with 15-minute flights costing 2,265 kwacha (Dh680).
Accommodation: The Royal Livingstone Victoria Falls Hotel by Anantara is an ideal place to stay, within walking distance of the falls and right on the Zambezi River. Rooms here start from 6,635 kwacha (Dh2,398) per night, including breakfast, taxes and Wi-Fi. Water arrivals cost from 587 kwacha (Dh212) per person.
Gender equality in the workplace still 200 years away
It will take centuries to achieve gender parity in workplaces around the globe, according to a December report from the World Economic Forum.
The WEF study said there had been some improvements in wage equality in 2018 compared to 2017, when the global gender gap widened for the first time in a decade.
But it warned that these were offset by declining representation of women in politics, coupled with greater inequality in their access to health and education.
At current rates, the global gender gap across a range of areas will not close for another 108 years, while it is expected to take 202 years to close the workplace gap, WEF found.
The Geneva-based organisation's annual report tracked disparities between the sexes in 149 countries across four areas: education, health, economic opportunity and political empowerment.
After years of advances in education, health and political representation, women registered setbacks in all three areas this year, WEF said.
Only in the area of economic opportunity did the gender gap narrow somewhat, although there is not much to celebrate, with the global wage gap narrowing to nearly 51 per cent.
And the number of women in leadership roles has risen to 34 per cent globally, WEF said.
At the same time, the report showed there are now proportionately fewer women than men participating in the workforce, suggesting that automation is having a disproportionate impact on jobs traditionally performed by women.
And women are significantly under-represented in growing areas of employment that require science, technology, engineering and mathematics skills, WEF said.
* Agence France Presse
