DUBAI: Fitch Ratings upgraded Oman’s credit rating to BB+ on Monday from BB, on the back of a decline in the Gulf state’s debt-to-GDP ratio and more disciplined government spending, plus higher oil prices, the agency said in a statement.

“The upgrade reflects the use of high oil revenues to pay down debt and spread its maturity, spending restraint reducing external risks, and an increase in Fitch’s oil price forecast,” Fitch said.

Gross debt fell to about 40% of GDP in 2022 from around 60% the previous year and Fitch projects this to be at 36% of GDP in 2023, before stabilising at around 35% in 2024 and 2025.

Seen as one of the Gulf’s weaker economies, Oman is primarily reliant on hydrocarbon revenue but launched a medium term fiscal plan in 2020 to reduce public debt, diversify sources of revenue, and spur economic growth.

Increased revenue on the back of high oil prices last year helped Oman post a budget surplus of 1.144 billion rials ($2.97 billion), and repay 1.1 billion rials in loans in the first quarter of this year.

Oman’s GDP in the first half of the year reached almost 17 billion rials, the state news agency reported on Monday, citing a senior official at the ministry of economy, up from almost 16.7 billion rials in the same period a year ago.

However, GDP in the second quarter shrank 9.5% year on year to 10.1 billion rials.