(Reuters) – S&P Global Ratings on Friday revised its outlook for Bahrain from “positive” to “stable,” saying spending pressures could cause the country’s budget deficit to widen more than the credit rating agency had previously expected. It pointed out.
S&P maintained the country’s rating at B+/B, saying it expects the government to implement measures to reduce its fiscal deficit and benefit from additional support from other Gulf countries as needed.
“We expect the government to reinvigorate reforms to strengthen the fiscal position primarily through increased non-oil revenues through 2026,” the government said in a statement.
The agency currently projects Bahrain’s budget deficit to be between 3% and 4% of GDP from 2023 to 2026, compared with 2% to 3% in the previous review.
In the first quarter of 2023, Bahrain recorded economic growth of 2%, driven by non-oil profits due to lower oil production due to seasonal maintenance.
Earlier this year, the oil-producing nation introduced a new “golden license” to benefit companies bringing major 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 5th Fleet, is one of the most indebted countries in the Gulf, with $10 billion tied to reforms by wealthy neighbors aimed at achieving fiscal balance by 2024 in 2018. was rescued through support measures.
S&P peer Fitch maintained Bahrain’s rating at B+ with a stable outlook in July, while Moody’s changed its outlook on Bahrain from negative to stable in April last year, leaving the country unchanged at B2.
(Reporting by Vedant Vinayak Vichare in Bengaluru; Editing by Devika Syamnath and Arun Koyyur)
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