Global credit ratings agency Fitch downgraded Bahrain’s long-term foreign-currency issuer default rating to “B” from “B+” on Monday, citing high public debt, large fiscal deficits and low foreign exchange reserves.
The kingdom’s high reliance on hydrocarbon income as well as lower oil revenue, higher interest costs and a substantial increase in public sector pay have lifted its fiscal deficit in recent years.
“The downgrade reflects Fitch’s expectation that very high government debt/GDP will continue to rise, despite the implementation of a fiscal consolidation package,” Fitch said in a statement.
Late last year, Bahrain announced fiscal reforms including higher fuel prices and tariffs on electricity and water to bolster public finances.
The agency maintained the kingdom’s outlook at “stable.”
Peer agency S&P also downgraded the kingdom’s sovereign credit rating to “B” in late November last year.
(Reporting by Rishab Shaju in Bengaluru; Editing by Sahal Muhammed)
