The four-day meeting in Birmingham comes three months after the Tories were ousted from power by Labour
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“Despite being the least oil dependent country in the Gulf Cooperation Council, Bahrain remains highly reliant on hydrocarbon exports, which exposes the economy to the volatility of international oil prices. Bahrain’s hydrocarbon reserves are relatively limited compared to other GCC states,” the ratings agency said.
The Central Bank of Bahrain previously forecast the country’s fiscal surpluses to delcine to 2.2 per cent of gross domestic product this year, and to an a average of 0.7 per cent in 2010-2011.
Moody’s said Bahrain’s external and fiscal accounts are more sensitive to a downturn in oil prices than those of most other oil exporters in the region, while the rapid expansion of government expenditure in recent years, has eroded fiscal flexibility. Moody’s noted that the IMF has estimated Bahrain’s fiscal breakeven oil price has risen to around $75 per barrel, considerably higher than today’s average oil price which is trading below $60 per barrel.
Moody’s said Bahrain has more limited fiscal resources compared to other oil-exporting countries in the Middle East region.
“Given the large size of Bahrain’s financial sector in relation to the economy and the government’s resources, we will be closely monitoring its performance in light of the global financial market turmoil,” sasid Moody’s.
Bahrain’s foreign and local currency government bond are rated A2 by Moody’s. It said these investment grade ratings are supported by the government’s net financial asset position and the country’s high, “albeit volatile GDP per capita.”
The country’s ratings outlook was changed to negative from stable in January this year amid deterioating oil prices and the fallout from the global crisis.
The four-day meeting in Birmingham comes three months after the Tories were ousted from power by Labour
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