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Country Risk Service Bahrain

  • ID: 2118732
  • May 2016
  • Region: Bahrain
  • 26 Pages
  • The Economist Intelligence Unit
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Bahrain's sovereign risk score has been downgraded from BB to B. It is constrained by political tensions and a widening fiscal deficit. Although the sovereign retains access to the international debt markets, demand for its debt is declining and yields are rising. Bahrain remains sensitive to further shifts in oil prices and has an only modestly sized sovereign wealth fund.

Bahrain will maintain its currency peg to the US dollar, despite lower oil income. The current account will remain in deficit, and foreign-exchange reserves will decline in 2016. If needed, financial support from Bahrain's neighbours, particularly Saudi Arabia, will help the Central Bank of Bahrain maintain the peg, and there is a growing risk of capital controls being introduced.

Bahrain's role as a banking hub has taken a reputational hit as a result of ongoing political unrest. Banks are highly reliant on foreign financing, the cost of which is likely to rise in the short term as political unrest increases and oil prices constrain local liquidity.

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Country Risk Service Bahrain

Risk assessment
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk

Definitions
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Overall country risk

Sovereign risk
Current assessment
Positive factors
Negative factors
Rating outlook

Currency risk
Current assessment
Positive factors
Negative factors
Rating outlook
Foreign-exchange regime

Banking sector risk
Current assessment
Positive factors
Negative factors
Rating outlook

Generic risks
Political risk assessment
Economic structure risk assessment

Country risk
Overall country risk

Central scenario for 2016-20: Political stability

Central scenario for 2016-20: Election watch

Central scenario for 2016-20: International relations

Central scenario for 2016-20: Policy trends

Central scenario for 2016-20: Fiscal policy

Central scenario for 2016-20: Monetary policy

Central scenario for 2016-20: Economic growth

Central scenario for 2016-20: Inflation

Central scenario for 2016-20: Exchange rates

Central scenario for 2016-20: External sector

Central scenario for 2016-20: External financing requirement

Central scenario for 2016-20: External debt

Key risk indicators

Ratings summary

Quarterly indicators

International assumptions summary

Economic structure

Public finances

Exchange rates, interest rates and prices

Financial sector

Current account

International liquidity

Foreign payment and liquidity indicators

External trade

External financing requirement

External debt stock

External debt service

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