Bahraini.TV

Tuesday, Fitch Ratings affirmed Bahrain’s Long-term foreign and local currency Issuer Default Ratings at ‘A’ and ‘A+’ respectively. The Outlook on the Long-term IDR remained stable. The rating agency also affirmed short-term foreign currency IDR at ‘F1′ and Country Ceiling at ‘A+’.

Purvi Harlalka, Associate Director in Fitch’s Sovereign group said, “Although growth has slowed and the budget has moved into large deficit, government and external debt ratios will remain better than rated peers. Domestic banks’ exposure to the property sector will continue to exert pressure on asset quality, but Fitch believes further deterioration can be absorbed with capital ratios remaining adequate, supporting the Stable Outlook.”

The rating was supported by its high per capita income relative to the ‘A’ range median. According to Fitch, a credible monetary and exchange rate regime contained inflation at 2.8% on average during the past five years. Public finances were also a rating strength. Fitch forecast the deficit and debt to be reined in beyond 2010.

Bahrain’s dependence on oil revenues remained high compared to peers and neighbors, making its fiscal out turn volatile. Also, exports were more commodity-dependent than typical ‘A’ range sovereigns. However, Bahrain recorded current account surpluses and will register a further, albeit reduced, surplus of 4% of GDP this year, said Fitch.