Manama, (Business News Report)|| Bahrain’s budget is expected to record a surplus this year for the first time since 2008, due to the significant rise in oil prices.
A Gulf report issued by the National Bank of Kuwait said that Bahrain’s budget is on the way to record a surplus by the end of this year, for the first time in 14 years, supported by the rise in crude oil prices.
The report indicated that “the rise in oil production and prices will contribute to boosting the economic growth rate in Bahrain to 3% in 2022, exceeding the pre-Coronavirus GDP growth rate of 2.2%.”
“Indeed, the government could record its first fiscal surplus in 14 years in 2022, beating its [pandemic-delayed] target of balancing the budget by 2024,” the report said.
However, it pointed out that the continued rise in government debt levels remains one of the main sources of concern, in addition to the possibility of a decline in oil prices.
Although Bahrain is considered one of the most diversified economies in the Gulf region, it will benefit more than others from rising oil revenues, given the weaknesses in the public finances.
The growth of the non-oil economy is expected to reach 3% in 2022, thanks to the lifting of restrictions related to the containment of Coronavirus to a large extent, according to the same report.
The tourism and hospitality sectors are set to continue to recover, with the financial sector, which is one of the main sectors (20% of non-oil GDP) benefiting from improved business activities and higher interest rates.
On April 21, the global credit rating agency, Moody’s, confirmed Bahrain’s long-term sovereign rating at (B2), with a change in its future outlook from negative to stable.
The agency said, in a statement, that changing the outlook to stable reflects a decline in the downside risk of Bahrain’s ratings.
Moody’s added that the significant increase in oil prices since early 2021, and expectations that they will remain high during the next few years, have led to improved expectations for Bahrain’s sovereign fiscal and external balances, which reduces the rate of government debt accumulation and external weakness pressures.
Bahrain’s economy has faced great challenges over the past years, and this crisis has exacerbated during the Coronavirus pandemic, but the $10 billion Gulf support, which Manama received in 2018, helped to confront these pressures in relative terms.