Moody's, the credit rating agency, changed its outlook for the Bahrain economy from "stable" to "negative", and confirmed its long-term rating at "B2", which means a high degree of risk.
The agency stated in a report issued, Thursday, that "the change of outlook reflects an increase in negative risks to Bahrain's ratings, as a result of greater financial weakness than expected."
And it considered that the great financial deterioration during 2020 "will make the road towards stabilizing the government's debt burden at a sustainable level much more difficult than the agency previously expected."
She expected that the decline in oil prices, the economic shock caused by the Corona pandemic, and the constantly high spending outside the budget, will continue in the coming years.
Moody's also expected the fiscal deficit to remain in the range of 10% of GDP in the next two years, with the debt burden rising to 140% of GDP by 2023.
The affirmation of Bahrain’s B2 rating takes into account Moody's expectations that financial support from Saudi Arabia, Kuwait and the UAE will continue, partly easing measures of debt and debt sustainability in Bahrain.
In 2018, Saudi Arabia, the UAE and Kuwait approved a financial rescue package for Bahrain, which was facing a lack of liquidity, with a value of $ 10 billion in support, provided in tranches; While those countries did not complete the submission of the entire promised package.
During 2020, the country's fiscal deficit widened to 18% of GDP, up from 9% in 2019, in conjunction with losses caused by the pandemic and the drop in oil prices.
As a result, “government debt increased to 130% of GDP in 2020, from 102% in 2019, and 95% in 2018 (including borrowing from the central bank),” according to the agency.ض
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