The Bahrain Monetary Agency (BMA) announced that international rating agency, FitchRatings, has upgraded Bahrain’s credit outlook to ‘positive’, from ‘stable’.
FitchRatings also affirmed Bahrain’s sovereign long term foreign currency debt rating of ‘A-’ (A minus) and the long term local currency debt rating of ‘A’.
The improved outlook for Bahrain reflects the Kingdom’s continued strong economic growth based on the Government’s prudent yet progressive handling of economic, fiscal and political reforms.
Earlier, in April 2006, Standard & Poor’s (S&P) upgraded Bahrain’s foreign currency debt rating to ‘A’, from ‘A-’, with the outlook as ‘stable’.
“The ratings demonstrate international confidence in the economic and financial strength of Bahrain,” said Shaikh Salman bin Isa Al Khalifa, Director, Financial Stability, at the BMA.
“The country has been pursuing a broad programme of reforms, which are underpinning Bahrain’s continued success in attracting foreign investment and as a premier international financial centre.”
In a statement issued Thursday, FitchRatings noted that “the rating and outlook are supported by high per capita income, an overall net external creditor position, and a diversified economy”.
Real GDP growth, which is forecast to reach 7% in 2005, is expected to average 6.7% in 2006-07, led by the non-oil sector and, in particular, the financial sector.
“There is a firm pipeline of investment projects spanning infrastructure, tourism, oil refining and energy-intensive industries, with increasing private sector participation,” said the FitchRatings statement.
“High oil export receipts have swelled the surpluses on the public finances and on the current account of the balance of payments. The general government surplus is conservatively forecast to reach 5% of GDP in 2006. Capital project spending has been increased but the government retains fiscal flexibility and has maintained a prudent stance. The current account surplus will top 12% of GDP.”
FitchRatings noted that Bahrain’s strengths include high per capita income and economic diversification; low and falling public debt; sovereign and overall net external creditor; high quality financial sector regulation; and public sector and labour market reforms.