Political Risk Analysis - Uncertain Succession Plans Threaten Long-Term Stability - MAY 2018
BMI View: The lack of an heir apparent to Sultan Qaboos, coupled with uncertainty over succession procedures, raises the risk of a challenging transfer of power in Oman. Our core view is that beyond a short period of weak policymaking as the new sultan builds up legitimacy, broad policy continuity is likely to ensue. That said, we see downside risks of a more disorderly transfer of power, potentially leading to severe disruption to economic reforms.
While our core view is for Oman to continue enjoying broad political stability in the long term, the lack of an heir apparent raises the risks of challenging transition which would, in turn, weigh on policymaking and political stability. The sultan, who is 77 years old, childless, and reportedly suffers from cancer, still exercises absolute rule and controls most key ministerial portfolios (such as the central bank and finance ministry). He has not publicly named a successor, nor has he clearly groomed anyone for the role, and we thus believe that whoever succeeds him will initially struggle to govern effectively due to a lack of legitimacy and experience. Although our core view is for the next sultan to eventually consolidate power and carry on with ongoing economic diversification plans, we see risks of more serious political instability, which would cause severe disruption to economic reforms.
Succession Procedures Offer Little Certainty
|Next Sultan Must Continue Economic Diversification|
|Oman - Current Account Balance & Brent Crude Price|
|e/f = BMI estimate/forecast. Source: BMI, Ministry of National Economy|