Bahrain: S&P revises outlook to ‘positive’ on govt reforms, high oil prices

Bahrain: S&P revises outlook to ‘positive’ on govt reforms, high oil prices

S&P Global Ratings has revised its outlook on Bahrain to “positive” from “stable”, citing the government’s fiscal reforms and high crude prices.

“The positive outlook reflects the government’s ongoing implementation of the updated fiscal balance programme (FBP) by expenditure cuts and revenue-enhancing initiatives, including the doubling of the value-added tax (VAT),” the rating agency said on Saturday.

The Arab country is benefiting from a surge in regional activity tied to higher oil prices. Brent, the benchmark for two-thirds of the world’s oil, is currently trading at about $83 a barrel after falling to less than $30 in 2020.

Bahrain’s economy grew 6.9 per cent in the second quarter of 2022 to record the highest rate of growth in the past 11 years, driven by a strong performance in the country’s non-oil sectors involved in the country’s economic reform plan.

Bahrain, the smallest economy in the six-member GCC bloc, has sought ways to cut spending and achieve a balanced budget by 2024.

It unveiled an economic reform plan last year that seeks to invest about $30 billion in projects to drive post-pandemic growth, boost employment for citizens and attract $2.5 billion in foreign direct investment by 2023.

The plan also increased value-added tax from five per cent