© Reuters. FILE PHOTO: General view of Bahrain World Trade Center is seen during early evening hours 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 to “stable” from “positive”, citing spending pressures that could push the country’s fiscal deficit wider than the credit ratings agency previously expected.
S&P maintained its “B+/B” ratings on the country and said it expects that the government will implement measures to reduce its budget deficit and benefit from additional support from other Gulf sovereigns if needed.
“We expect the government will reinvigorate reforms to consolidate its fiscal position, largely via increasing non-oil revenue through 2026,” it said in a statement.
The agency now projects fiscal deficits of 3% to 4% of Bahrain’s GDP over 2023-26, compared with 2% to 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 dropped due to seasonal maintenance.
The oil producing country earlier this year introduced a new “golden licence” offering benefits to companies bringing large-scale investment projects to the small Gulf state as it seeks to reduce debt while boosting growth and creating jobs.
Bahrain, home to the U.S. Navy’s Fifth Fleet, has been one of the most indebted states in the Gulf and was bailed out in 2018 by wealthy neighbors with an aid package of $10 billion tied to reforms aimed at attaining fiscal balance by 2024.
S&P peer Fitch affirmed Bahrain at ‘B+’ with stable outlook in July, while Moody’s (NYSE:) changed Bahrain’s outlook to stable from negative and affirmed B2 ratings in April last year.
