S&P Global Ratings has downgraded its credit ratings for Oman as twin government and current account deficits, financed predominantly through external borrowing, erode the sultanate’s net asset positions.

The long-term foreign and local currency sovereign credit ratings have been lowered to BB from BB+, while the short-term foreign and local currency sovereign credit ratings have been affirmed at B.

The transfer and convertibility (T&C) assessment on Oman was also lowered to BB+ from BBB-.

S&P says the outlook is stable as it expects Oman’s fiscal and external deficits to shrink gradually leading up to 2020, adding that it could lower the ratings on Oman if weaker economic growth were to result in its GDP per capita falling expectations.

It could consider raising the ratings on Oman if forecasts for the sultanate’s fiscal and external positions substantially improve, perhaps due to a significant decline in government external debt accumulation or a sharp increase in usable foreign exchange reserves.