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Moody’s changes Bahrain’s outlook from negative to stable

Bahrain's outlook

Manama, (Business News Report)|| Credit rating agency Moody’s revised the Kingdom of Bahrain’s economic outlook from negative to stable.

Moody’s maintained Bahrain’s long-term sovereign rating at (B2).

The agency confirmed that changing the outlook to stable “reflects an easing of downside risks to Bahrain’s ratings.”

“The large increase in oil prices since early 2021 and Moody’s expectation that oil prices will remain elevated for the next few years improve the outlook for the sovereign’s fiscal and external balances, reducing the rate of government debt accumulation and lowering government liquidity and external vulnerability pressures,” the agency said.

Bahrain’s outlook

But the agency said that the confirmation of the rating at (B2) embodies the agency’s view that debt and sustainability measures in Bahrain are still very weak, and that government liquidity and external weakness are high risks.

Moody’s pointed out that the financial, economic and political support provided by Saudi Arabia, Kuwait and the UAE alleviates the credit weaknesses of Bahrain.

It also stated that its confirmation of Bahrain’s rating came by supporting a high per capita income, and a relatively diversified economy compared to most other governments in the Gulf Cooperation Council countries, which provide a degree of shock absorption and economic resilience.

Bahraini government’s fiscal deficit in 2021 is less than 12 percent of the gross domestic product, down from 18 percent in 2020, and expected it to decrease to less than 4% during 2022 and 2023, supported by high oil prices, Moody’s estimated.

Meanwhile, the agency reported that it expects Bahrain’s government debt to fall to less than 120% of GDP in 2022 and 2023, from about 130% in 2020.

Earlier, the national accounts bulletin of Bahrain’s economy showed an increase in GDP at constant prices in Bahrain by 4.29% in the fourth quarter of 2021, compared to the same quarter of 2020.

The oil sector increased by 4.67%, and the non-oil sector by 4.21% in the fourth quarter of 2021, on an annual basis.

Bahrain’s GDP declined by 3.52% in the fourth quarter of 2020.

On a quarterly basis, Bahrain’s economy grew by 1.49% in the fourth quarter of 2021.

This came with the support of the non-oil sector rising by 2.86% in the fourth quarter of 2021, compared to the third quarter of 2021, while the oil sector declined by 4.49% during the fourth quarter of 2021, on a quarterly basis.

Whereas, the total value of Bahrain’s GDP amounted to about 3.218 billion riyals in the fourth quarter of 2021, compared to 3.086 billion riyals in the same quarter of 2020, and 3.171 billion riyals in the third quarter of 2021.

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