Fitch Ratings has revised Bahrain's Long-Term Foreign-Currency Issuer Default Rating (IDR) outlook to Negative from Stable, while affirming the rating at 'B+'. The decision reflects mounting fiscal pressures, including high deficits, rising debt, and delays in economic reforms. Bahrain's debt-to-GDP ratio is projected to increase from 130 per cent in 2024 to 136 per cent in 2026, significantly above the 'B' category median of 54 per cent. The fiscal deficit is expected to remain around 9 per cent of GDP in 2025 and 2026, driven by lower oil prices and high interest costs, which are set to rise to 33 per cent of revenue in 2025. Despite weak public finances, Bahrain continues to benefit from strong support from GCC partners, particularly Saudi Arabia and the UAE. The government is negotiating the 2025-2026 budget, with potential spending adjustments, including reforms to subsidy structures. Moreover, hydrocarbon revenue is expected to remain stable, bolstered by increased refinery output. Fitch notes Bahrain's reliance on GCC concessional funding and market access to maintain its FX peg, with foreign reserves projected to remain at USD 4.8 billion, covering only 1.3 months of external payments. While additional GCC financial support remains a possibility, the rating agency emphasises the need for stronger fiscal consolidation to stabilise debt levels. Attribution: Amwal Al Ghad English Subediting: M. S. Salama
