S&P Global has lowered Bahrain’s outlook to negative because of continuing financial challenges

S&P Global has lowered Bahrain’s outlook to negative because of continuing financial challenges

S&P Global Ratings has changed Bahrain’s financial outlook from stable to negative because of ongoing money problems and falling oil prices.

Bahrain’s Outlook

The agency has confirmed Bahrain’s ‘B+/B’ long- and short-term credit ratings for both foreign and local currency.

The negative outlook reflects ongoing risks to the country’s public finances.

S&P expects Bahrain’s government debt to rise to 144% of its GDP by 2028, up from 130% in 2024. This increase is due to lower oil prices, slower fiscal reforms, and market instability—factors that could put more pressure on government interest payments and foreign currency reserves.

The agency noted a growing fiscal deficit, which is expected to reach about 7% of GDP in 2025, up from 5.2% in 2024. This rise is caused by weaker oil prices, market volatility, higher social spending, and greater risks to funding costs.

Bahrain’s ability to manage its finances is limited due to high debt, with government debt expected to grow from 130% of GDP in 2024 to 144% by 2028.

Big Numbers

S&P also warned about Bahrain’s weak foreign currency reserves, which are expected to decrease slightly to between $3 billion and $3.5 billion by the end of 2025, due to large external financing needs.

GDP Growth

Bahrain’s GDP grew by 2.1% year-on-year in the third quarter of 2024, according to the latest data from the Information & eGovernment Authority.

The GDP at constant prices was BD 3,734 million, while the GDP at current prices reached BD 4,342 million in the same period.

The growth was mainly driven by the non-oil sector, which grew by 3.9% in constant prices and 1.5% in current prices—showing Bahrain’s ongoing efforts to reduce its dependence on oil.

Published: 24th April 2025

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