Mubasher: Bahrain suffers a weak balance sheet and is vulnerable to external and liquidity risks, which weaken its credit profile, according to a report released by Moody's Investors Service.

Owing to the kingdom’s dependence on oil, the decline in oil prices has weighed on the Bahraini balance sheet, the report added.

"Bahrain's public finances are highly sensitive to oil price fluctuations because of a very high share of oil-related revenues in government revenue and a very high fiscal breakeven oil price,” senior analyst at Moody’s, Alexander Perjessy, said.

However, the oil-rich country’s economy enjoys a group of credit strengths, including very high per capita income, a diversified economy compared to the other GCC states, along with a positive net international investment position.  

Moreover, the financial support package committed in 2018 by neighbouring GCC governments supports the Bahraini economy.

“A more rapid fiscal consolidation than expected that stabilizes and eventually decreases the government's debt burden would be positive for the sovereign credit profile. A substantial and sustained rebuilding of the central bank's foreign-currency buffers that materially decreases external vulnerability would also be positive,” Moody’s maintained.