Bahrain received its first downgrade in over two years from Fitch Ratings, which said it will likely “require further Gulf backing” in the medium term as the government’s finances remain under strain.
“This may be contingent on Bahrain enacting further fiscal reforms given that Gulf creditors are themselves facing the need for fiscal consolidation,” Fitch analysts including Toby Iles said in a report.
Fitch on Friday cut Bahrain’s sovereign rating one step to B+, leaving it four levels below investment grade and on par with Egypt, Bolivia and Jamaica. The outlook is stable.
Bahrain, the smallest among economies of the six Gulf Cooperation Council members, is vulnerable despite a $10 billion bailout package secured from its regional allies in 2018. Lower oil prices and the global coronavirus pandemic have combined to stretch its finances.
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