MANAMA, 26 August 2007 — Bahrain’s status as a leading financial center in the Middle East was reaffirmed by yet another global vote of confidence in country’s economic performance and management of the domestic economy, a top official at the Central Bank of Bahrain (CBB) said yesterday.
Rasheed Mohammed Al-Maraj, governor of the CBB, reacting to Fitch rating agency’s sovereign rating, said that as the Kingdom’s central bank and regulator of Bahrain’s international financial center, the CBB welcomes global votes of confidence for Bahrain’s continued economic success.
Fitch upgraded on Friday Bahrain’s sovereign credit rating to ‘A’, from ‘A-’, with stable outlook. Strong growth in Bahrain’s non-oil sector and recent political and economic reforms were taken into account by Fitch for the ratings upgrade. The agency said Bahrain was growing rapidly without overheating and its outlook was stable.
Bahrain also enjoys a foreign currency debt rating of ‘A’ from international rating agency Standard & Poor’s (S&P) and A1 for foreign currency country ceiling for bonds from Moody’s. Both ratings were issued earlier in 2007.
Al-Maraj said: “The government’s unwavering commitment to economic and political reforms, complemented by sound fiscal management, has created a solid foundation for renewed economic prosperity for Bahrain.”
Bahrain’s economy has, in the past two years, transcended to higher levels of growth of between 6-8 percent, compared to 4-5 percent in past years. For 2006, real economic growth is estimated at 7.1 percent, driven mainly by the non-oil sector.
“While higher oil prices have helped, Bahrain’s economic buoyancy is due as much to the deep economic and structural reforms being implemented,” Al-Maraj said.
Central to the reform process is increased private sector involvement in the economy and reduction of government intervention to create a more transparent and business-friendly environment for all businesses based in Bahrain, whether commercial or financial.
The reform process is broad and touches every segment of the economy, including the education and healthcare sectors.
The country’s financial services industry has been a major beneficiary of the policy to encourage private enterprise. In 2005, having surpassed the oil sector as the largest contributor to GDP, the financial sector’s contribution to GDP is expected to exceed 28 percent for 2006.
“The general stability of the financial sector and the overall growth-oriented economic climate point to a favorable outlook for Bahrain in the years to come,” he said.
“The CBB will continue its robust yet market-friendly regulation and supervision of the financial services industry to support the government’s many economic initiatives, with the ultimate goal of improving the standard of living of all citizens,” Al-Maraj added.
