© Reuters. FILE PHOTO: The general view of Bahrain’s World Trade Center is seen in the early evening in Manama, Bahrain, May 2, 2020. Picture taken May 2, 2020. REUTERS/Hamad I Mohammed/File Photo
(Reuters) – S&P Global Ratings on Friday revised Bahrain’s outlook from “positive” to “stable”, citing spending pressures that could widen the country’s budget deficit more than expected by the credit rating agency.
S&P maintained its ‘B+/B’ rating on the country and said it expected the government to implement measures to reduce its budget deficit and receive additional support from other Gulf sovereigns if necessary.
“We hope that the government will restart reforms to consolidate its fiscal position, largely through increasing non-oil revenues until 2026,” he said in a statement.
The agency now projects budget deficits of 3-4% of Bahrain’s GDP over the 2023-2026 period, up from 2-3% in its previous review.
In the first quarter of 2023, Bahrain recorded economic growth of 2%, driven by non-oil gains as oil production fell due to seasonal maintenance.
The oil-producing country earlier this year introduced a new “golden license” offering benefits to companies bringing large-scale investment projects to the small Gulf state, as it seeks to reduce its debt while boosting growth and creating jobs.
Bahrain, home to the US Navy’s Fifth Fleet, is one of the most indebted Gulf states and was bailed out in 2018 by wealthy neighbors with a $10 billion aid package linked to reforms aimed at achieve a balanced budget by 2024.
S&P peer Fitch affirmed Bahrain’s rating at ‘B+’ with stable outlook in July, while Moody’s (NYSE:) changed Bahrain’s outlook from stable to negative and affirmed the B2 rating in April. ‘last year.
