Oman has reportedly asked its GCC neighbors for help in redressing an ailing economy with revenues undermined by OPEC production cuts, and COVID-19 restrictions and lockdowns.
A call for help
Oman, the largest Gulf oil exporter that is not a member of OPEC, is one of the most vulnerable oil producers in terms of credit profiles along with Bahrain, and Iraq.
Under the latest round of agreed cuts, Oman will slash its crude production by 23%.
It’s break-even oil price – the price required to balance its government budget – is $82, according to Fitch Ratings.
In April, the World Bank predicted that its economy would contract by 3.5% in 2020 due to the oil price slide. It estimated public debt to exceed 70% of GDP in 2020 and beyond.
Fitch predicted that Oman’s non-oil economy will slip into a recession of 5% this year, and noted that “support from the rest of the GCC may be necessary for the sustainability of their currencies and debt levels.”
Diversification plans – underpinned by the Vision 2040 program – were underway to wean the country off its hydrocarbon dependence.
An economic pandemic
Ismail Numan Telci, Vice President at ORSAM and Associate Professor at Sakarya University, said the pandemic has had a devastating impact on trade revenues, especially given Oman’s dependency on Asia.
Gulf News reported Oman has confirmed 745 new cases of the novel coronavirus, bringing to 25,269 the country’s overall infections, quoting the Omani news agency (ONA) report.
The ministry announced six more deaths from COVID-19 over the previous day, raising Oman’s total of such fatalities to 114.
A GCC at risk
MenaFn reported there will undoubtedly be obstacles on the road toward recovery, in all countries that include the GCC region.
Saudi Arabia’s growth is forecast at -2.3%, with non-oil GDP contracting by 4%. In the United Arab Emirates, real GDP growth is forecast to slip by 3.5%, according to the IMF.