Bahrain’s credit rating was downgraded further into junk status by Fitch, which said that recent measures to raise revenue and trim spending won’t be enough to reverse rising debt levels. By 2027, the country’s deficit is expected to still be 9.2% of GDP, with the debt-to-GDP ratio reaching over 150%, Fitch said. Standard & Poor’s had downgraded it in November.
In December the government set out plans to tackle the situation, including higher energy prices, fees for services, and dividends from state-owned firms, along with a corporate income tax from 2027. Bahrain has the weakest finances in the Gulf and in the past has received bailouts from richer neighbors including Saudi Arabia and the UAE. In contrast, the credit rating of Oman — whose economy used to be bracketed with Bahrain’s — has moved into investment grade after it took steps to balance its budget and lower its debts.