The death of Sultan Qaboos bin Said – the world’s longest serving monarch of 49 years – on 11 January marks an historic moment for Oman, and the apparently swift and painless transition demonstrates a degree of harmony in the kingdom’s top ranks that the broader region could take heed from.
Ehsan Khoman, Head of MENA Research and Strategy at MUFG, sees the appointment as “credit positive”, and likely to accelerate reforms.
“He is expected to accelerate economic and fiscal reforms, notably faster rationalisation of government expenditures, particularly on the spending side of the equation, which will narrow the country’s twin deficits and boost the country’s credit standing,” Khoman forecast.
The incumbent still has a lot of work ahead of him, with an urgent need to navigate complex internal and geopolitical landscapes, with tensions in the region running high amid the US-Iran escalation and the ongoing freeze-out of Qatar by its GCC neighbours. On top of that, Oman is facing a large structural deficit and rising debts.
“The negative credit dynamics, reflected in multiple agency downgrades to subinvestment grade in recent months (S&P: BB, Moody's: Ba1; Fitch: BB+), can only be arrested with a concerted effort towards fiscal consolidation and structural reform, in our view. Whilst prospects on that front have appeared uncertain given the weak policy environment and comfort drawn from still considerable fiscal buffers, we expect the energy and vigour surrounding the new Sultan to accelerate the pace of change.”