Global investors and financiers continue to show confidence in the Oman economy, as demonstrated via the sizeable funding options provided to the sultanate. During the first seven months of the year, the authorities succeeded in securing financing from international sources above and beyond the need of covering the projected deficit for the fiscal year.

The 2017 budget was prepared with expenditures and revenues of $30.2 billion and $22.4 billion, respectively, representing a deficit of nearly 12 per cent of 2016 GDP, certainly a high level for Oman, a country know for embracing conservative socioeconomic policies.

In fact, the projected deficit for fiscal year 2017 compares favourably with 2016, which ended with the budget in the red to the tune of $13.7 billion, or 60 per cent above the originally planned figure. Anyway, Oman raised a total of $10.55 billion from three different sources, notably higher than the projected deficit for 2017, suggesting possible other uses at least for part of the money raised.

This could be particularly true of a loan granted by a group of Chinese banks. What’s more, there was no need to draw on the country’s international reserves to help overcome the shortage. This is vital, as Oman needs to maintain its international reserves to serve as a cushion for money in circulation and imports.

Oman’s sovereign wealth funds are currently estimated at $24 billion, which would barely cover the imports of $23.3 billion in 2016, in turn down from figures of previous years and especially the period before the plunge of oil prices, which necessitated the reduction in total import bill.

Turning to the financing details, in March the sultanate managed to sell international bonds worth $5 billion with maturities of five, 10 and 30 years. There was appetite for the issue, as the bidding amount stood at $20 billion, four times the required figure.

In May, Omani authorities succeeded in selling a sukuk worth $2 billion. Again, the issue was oversubscribed, reaching $6.9 billion. Several banks including Dubai Islamic Bank, Citigroup, Gulf International Bank and HSBC managed the deal.

In both cases, Oman was willing to offer interest rates above the market, and clearly commensurate with the relative risk factor in order to entice interest from prospective investors. In early August, a group of financial institutions from China extended loans of $3.5 5 billion. The drive fits the growing presence of Chinese investors in projects throughout the sultanate, like Duqm in central Oman.

Duqm represents a milestone in Oman’s attempt to strengthen its industrial, free zone and tourism sectors. Among other initiatives, the area hosts a Chinese-Omani industrial park.

However, major credit rating agencies believe Oman has a lot of homework to do to improve its budgetary and international financial positions. In a span of months, the country’s rating have suffered a beating and undermining the outlook.

In late July while officials were jubilant about securing external financing, Moody’s Investors Service assumed two steps against the country’s ratings. One dealt with downgrading Oman’s long-term issuer and senior unsecured bond ratings from Baa 1 to Baa2; the second involved changing the outlook from stable to negative.

In May, Standard & Poor’s downgraded Oman’s rating from BBB- to BB+, thus to below investment grade. It maintained a negative outlook as well. The move reflected S&P’s concerns about the status of external assets to disturbing levels.

But the Oman economy is certainly try hard in the environment of low oil prices.

The writer is a Member of Parliament in Bahrain.