The new Sultan of Oman Haitham bin Tariq al-Said faces immediate and significant structural challenges, said ratings agency Standard & Poor’s on Monday.
The Sultan faces a “narrowing window to address the country’s fiscal and economic challenges, amid a backdrop of weak oil prices,” the agency said in a statement.
Sultan Qaboos bin Said al-Said, the longest-serving leader in the Gulf region, died early on Saturday at the age of 79. July would have marked his fiftieth anniversary of ruling the country. He was succeeded by his cousin Haitham bin Tariq al-Said the same day in a smooth succession process.
“We anticipate that Sultan Haitham will face a difficult trade-off in the coming months between addressing social concerns, partly arising from weak growth and high youth unemployment, and rising fiscal, external, and funding pressures,” said S&P.
The agency noted that its current negative outlook on Oman’s credit rating reflects the risk of financial buffers continuing to erode unless action is taken to reduce the government’s deficit.
“Further delays in fiscal and structural reforms, including the introduction of value-added tax, could lead to higher deficits and rising government debt,” the agency added.
The country has depended on external borrowing for financing in the past. This debt is expected to become more expensive as regional tensions elevate risk, raise interest rates, and increase debt-servicing costs.