Fitch Ratings said Bahrain needs more financial aid from the Gulf Cooperation Council, despite reform measures.
Toby Iles, Fitch primary rating analyst, said Bahrain is a small producer of oil and is likely need support from 2023 onwards.
The country will need more financing than allocated for 2020, given current oil prices.
Iles said Bahrain’s small size and strategic importance contribute to continued support from Gulf allies. However, the kingdom will need to use the remainder of the package faster.
In 2018, Saudi Arabia, the UAE and Kuwait announced they would provide Bahrain with $10.25 billion over five years with zero interest. The move is said to help the country avoid a credit crunch.
The three major credit rating agencies had rated Bahrain’s debts as high risk.
Earlier last year, experts and bankers believed that Bahrain will need more financial aid from the Gulf soon.
Experts predicted in 2020 that Bahrain’s wealthier neighbors may be in trouble themselves due to lower oil prices and the Coronavirus economic repercussions.
Last March, Bahrain announced a stimulus package of $11 billion. The package included plans to spend $570 million on the private sector salaries to mitigate COVID repercussions.
Bahrain lacks the abundant oil and financial resources enjoyed by its neighbors. As well as, its public finances is among the weakest in the region. But, its Gulf allies provide it with political and economic support to maintain its stability. That is because of its importance in the face of Iranian influence in the region.