Bahrain Mirror: Moody's Investors Service has downgraded the Government of Bahrain's long-term issuer rating to B1 from Ba2, and maintained the negative outlook.

The main driver for the rating downgrade is Moody's view that the credit profile of the Bahraini government will continue to weaken materially in the coming years, predominantly because despite some fiscal reform efforts there is a lack of a clear and comprehensive consolidation strategy. In particular, the rating agency expects Bahrain's government debt burden and debt affordability to deteriorate significantly over the coming two to three years.

In the absence of more aggressive measures, Moody's expects that Bahrain will continue to post large fiscal deficits over the coming years. Following deficits of 18% of GDP on average in 2015 and 2016, Moody's expects fiscal deficits to stay in double-digits in 2017 and 2018, and narrow only gradually over the following years.

Given the negative rating outlook, any upward movement in the rating in the foreseeable future is highly unlikely. However, Moody's would consider moving the outlook back to stable if a clear and credible fiscal and economic policy response were to emerge, offering the prospect of containing the deterioration in the fiscal balance and government balance sheet.

Arabic Version