Ratings agency upgrade Bahrain outlook
Standard & Poor’s Ratings Services has revised its outlook on Bahrain to stable from negative, while the country’s sovereign credit rating remained unchanged at (‘BBB/A-2’).
In revising its outlook, the credit rating agency recognised that Bahrain has emerged from the 2011 crisis with a restrained but stable economy, primarily driven by a buoyant hydrocarbon sector and higher public spending.
In fact, the outlook on the Kingdom reflects S&P’s view of Bahrain’s stable growth, well regulated financial system, and manageable asset quality risks amongst other factors.
Welcoming the revision, the Central Bank of Bahrain (CBB) Governor Rasheed Al Maraj said: “The revision is not only recognition of Bahrain’s sound economic management and financial stability but also a vote of confidence in the Kingdom’s economic reform programme, and ability to withstand different shocks.”
“Our ambition to be a dynamic, competitive, well-diversified economy for the post-oil era continues, and encouraging the growth and diversification of the financial sector is a major pillar in that strategy,” said Mr. Al Maraj.
Assuming an average oil price of $111/barrel, S&P has forecast deficits of roughly 2pc of GDP for 2013-2015.
GCC development funds of about $1 billion annually over 10 years are expected to begin having an effect in 2013, the ratings agency further said.
“This non-debt financing should reduce Bahrain’s need to borrow to meet its capital expenditure needs and as a result, the general government debt burden is unlikely to increase significantly from current levels.”
According to S&P, large-scale public investment and greater hydrocarbon production should support growth prospects in the Kingdom.
On raising the ratings, the agency said that would happen if a credible political process emerged and a renewed social contract appeared likely. In addition, if the boost in public investment improved Bahrain’s growth prospects beyond expectations, the ratings could be raised.
- Go big or go home: Expat salaries soar in Dubai
- Lebanon: Financial analysts warn of long-term economic repercussions after BLOM Bank attack
- Saudi companies analyze switching between Gregorian, Hijri calendars
- Tunisian, Moroccan Chambers of Commerce meet to discuss economic partnership
- Egyptian economic experts predict inflation rate will continue to climb