Fitch downgrades Bahrain's credit rating
MANAMA - Fitch Ratings agency on Tuesday downgraded Bahrain's long term credit outlook to a non-investor level, making it the first Gulf state to receive the low rating over slumping oil prices.
"Lower oil prices are causing a marked deterioration in Bahrain's fiscal position," Fitch said in a statement.
The agency downgraded the small Gulf state's long-term foreign currency credit rating one notch to BB+.
Since oil prices began to slide two years ago, the kingdom has been hit with a string of ratings downgrades from all major international agencies.
Fitch expected general government debt to rise to nearly 80 percent of gross domestic product (GDP) in 2016 from around 62 percent last year, the agency said in a statement.
The government budget deficit is forecast to widen to 15.4 percent of GDP in 2016, from 14.8 percent last year, Fitch said.
Although a relatively small producer, oil and gas income made up around 85 percent of Bahrain's revenues before the crude price slump, it said.
These revenues fell approximately 40 percent in 2015 and are expected to fall a further 20 percent this year.
Fitch said fiscal consolidation and spending cuts efforts are progressing, but were not sufficient to reach a more sustainable position.
"The decision by Fitch to cut Bahrain's credit rating to junk is likely to heighten concerns over the impact of low oil prices on the Gulf economies," said Jason Tuvey, from Capital Economics.
Other Gulf Cooperation Council (GCC) states -- Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates -- have also received ratings downgrades over the slump in oil revenues.