Bahrain outlook revised to negative

21 December 2014

Downward revision by Fitch Ratings partly due to declining oil price

Bahrain has seen its credit rating outlook revised downwards from stable to negative by the US’ Fitch Ratings, due to concerns about the impact of the declining oil price and the government’s mounting debts.

The ratings agency has maintained the Gulf state’s long-term foreign and local currency issuer default ratings (IDRs) at BBB and BBB+ respectively.

Bahrain’s fiscal breakeven oil price is estimated to be about $130 a barrel, according to Fitch Ratings’ estimates, which, given the declining oil price, is placing pressure on the oil exporter’s finances.

Delays to the 2015 budget, due to the November elections, also means analysts have little insight into the potential fiscal measures the government might adopt.

Government debt continues to climb, forecast to reach 47.2 per cent of GDP at the end of 2014, and 52 per cent in 2015.

The continued political stalemate between the Sunni-led government and the Shia-dominated opposition continues to cause concern to Fitch Ratings, with the agency not expecting a comprehensive political answer to be achieved in the immediate future.

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