Moody’s has downgraded its outlook for Oman’s banking system from stable to negative reflecting the government’s reduced capacity to support lenders.
The decision follows the downgrading of the government’s credit rating by the ratings agency in July.
“We expect a softening in Oman’s operating environment, with fiscal consolidation amid prolonged oil price weakness weighing on economic growth,” said Mik Kabeya, analyst at Moody’s.
The ratings agency forecasts credit growth in the banking sector to fall to 5% this year, down from more than 10% last year.
Despite the worsening environment, Moody’s said Omani banks’ liquid resources were “adequate” and said bond issuance and higher oil prices would help to relieve the pressure.
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