• S&P maintained its “B+/B” ratings for Bahrain, demonstrating confidence in government measures to address budgetary challenges.
• S&P now projects fiscal deficits of 3% to 4% of Bahrain’s GDP for 2023-2026, a shift from the previous estimate of 2% to 3%.
• Bahrain recorded 2% economic growth in the first quarter of 2023, primarily driven by non-oil gains during a period of reduced oil production.• Bahrain introduced a “golden licence” earlier in the year, offering incentives to companies bringing significant investment projects to stimulate growth, job creation, and alleviate debt.
S&P Global Ratings, in a significant move, revised Bahrain’s outlook from “positive” to “stable,” citing potential spending pressures that could widen the country’s fiscal deficit beyond earlier projections, according to Media reports.
The credit ratings agency maintained its “B+/B” ratings on Bahrain, anticipating government measures to mitigate the budget deficit and the possibility of additional support from fellow Gulf sovereigns.
“We expect the government will reinvigorate reforms to consolidate its fiscal position, largely via increasing non-oil revenue through 2026,” stated S&P in a released statement.
The agency now forecasts fiscal deficits ranging from 3% to 4% of Bahrain’s GDP over the period 2023-2026, a shift from the 2% to 3% projected in its previous review.
Bahrain experienced a 2% economic growth in the first quarter of 2023, driven by non-oil gains as oil production dipped due to seasonal maintenance.
The nation introduced a “golden licence” earlier this year, offering incentives to companies bringing substantial investment projects to boost growth, create jobs, and alleviate debt.
As one of the most indebted states in the Gulf, Bahrain received a $10 billion aid package in 2018 from affluent neighbors, tied to fiscal reforms aimed at achieving a balanced budget by 2024.
The country, housing the US Navy’s Fifth Fleet, faces evolving economic dynamics, and the revised outlook reflects ongoing efforts to navigate fiscal challenges.
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