Economy Fitch lowers Bahrain outlook on rising debt levels By Gavin Gibbon February 24, 2025, 6:56 PM Jakub Porzycki/Nur Photo via Reuters Connect People walk in the souq in Manama, Bahrain; non-oil revenue is forecast to increase to 8.8 percent this year Ratings agency downgrade Four steps below investment Public debt reaches $48bn Fitch, one of three influential ratings agencies, has placed Bahrain on a negative outlook amid growing concerns over increasing debt, low levels of foreign currency and high budget deficits. Debt is projected to rise from 130 percent in 2024 to 136 percent of GDP in 2026 “with a continued upward trajectory over the medium term”, the agency said, while interest payments are expected to account for one-third of revenue in 2025, up from 22 percent in 2019. The country’s rating remains at B+, which is four steps below investment grade, Fitch said on Monday. In January public debt increased to almost BHD18 billion ($48 billion), the country’s ministry of finance said last month. Bahrain sovereign ratings Bahrain, the smallest country in the GCC bloc of six with a population of almost 1.5 million people, has dwindling reserves of oil and gas. It is partially reliant on revenues from the Abu Safah field it shares with Saudi Arabia and requires an oil price of about $125 per barrel to achieve budgetary equilibrium. Earlier this year, a deal between Aluminium Bahrain (Alba), a major industrial player on the archipelago, and Saudi Arabia’s Ma’aden was abruptly called off “by mutual consent”. Global bank HSBC also announced plans to cease operations in Bahrain last week. Fitch predicts oil prices of $70 per barrel this year, with a further drop to $65 next year, although production in Bahrain will increase following the completion of large-scale upgrades at the Bapco refinery, which will take output up to 380,000 barrels per day. HSBC to sell Bahrain retail banking operations Bahrain space agency explores satellite manufacturing Bahrain duty free operator’s 2024 earnings rise 17% Non-oil revenue is forecast to increase to 8.8 percent this year and 9 percent in 2026, fuelled by a 15 percent tax on multinational companies, which was introduced in January and will be collected from the third quarter of the year. Despite the outlook, Bahrain can still call on the support of its GCC neighbours – in 2018 Bahrain was promised $10 billion in zero-interest loans by Saudi Arabia, the UAE and Kuwait. “In Fitch’s view, absent strong reforms, Bahrain could require a substantial increase in GCC concessional funding to stabilise and reduce debt,” the report said. “Our base case is that Bahrain would be able to obtain this funding from GCC partners.”
