S&P Improves Bahrain’s Outlook

General view of Bahrain World Trade Center is seen during early evening hours in Manama, Bahrain, May 2, 2020. REUTERS/Hamad I Mohammed/File Photo
General view of Bahrain World Trade Center is seen during early evening hours in Manama, Bahrain, May 2, 2020. REUTERS/Hamad I Mohammed/File Photo
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S&P Improves Bahrain’s Outlook

General view of Bahrain World Trade Center is seen during early evening hours in Manama, Bahrain, May 2, 2020. REUTERS/Hamad I Mohammed/File Photo
General view of Bahrain World Trade Center is seen during early evening hours in Manama, Bahrain, May 2, 2020. REUTERS/Hamad I Mohammed/File Photo

S&P Global Ratings has revised Bahrain's outlook to 'stable' from 'negative' on the back of new fiscal reforms aimed at improving non-oil revenues and cutting state spending, the ratings agency said in a statement.

Rated below investment grade, Bahrain was bailed out to avoid a credit crunch in 2018 with a $10 billion package from wealthy neighbors, Saudi Arabia, Kuwait, and the UAE.

That money was linked to a set of fiscal reforms, but after the coronavirus crisis strained its finances, Bahrain in September postponed plans to balance its budget by two years and announced plans to increase a value-added tax.

"The Bahraini government recently announced additional fiscal reforms to strengthen non-oil revenue and rationalize expenditure. These measures, along with the more supportive oil price environment, should improve the sovereign's fiscal position", S&P said in a statement this weekend.

The agency said it expects the government to benefit from additional financial support from its Gulf neighbors, if needed.

Bahrain will double value-added tax to 10 percent next year, a move which S&P estimated could contribute receipts of about 3 percent of gross domestic product in the next few years, up from about 1.7 percent this year.

The Gulf state is also planning to rationalize operational government expenditure and social subsidies in 2023 and 2024, a move which shifts the focus of its reforms more on the spending side than on raising non-oil revenues.

"We believe there is higher implementation risk in expenditure rationalization as the delicate political and social environment on the island, which has constrained the government's efforts, persists", S&P said.



Saudi Market Rises as Investors Absorb Tariff Shock

Entrance to the Tadawul Tower in Riyadh’s financial district (Asharq Al-Awsat)
Entrance to the Tadawul Tower in Riyadh’s financial district (Asharq Al-Awsat)
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Saudi Market Rises as Investors Absorb Tariff Shock

Entrance to the Tadawul Tower in Riyadh’s financial district (Asharq Al-Awsat)
Entrance to the Tadawul Tower in Riyadh’s financial district (Asharq Al-Awsat)

Gulf markets trimmed their losses on Monday, with the Saudi stock index erasing earlier declines and turning positive, driven by gains in major stocks such as ACWA Power and Aramco.

Despite a sluggish start, influenced by tariff concerns, the Tadawul index managed to overcome these challenges, closing 1.1% higher.

In contrast, other Gulf bourses saw limited declines, with Qatar and Kuwait exchanges registering drops, while the Muscat bourse also experienced a slight dip.

These movements come amid a broader retreat in global stock markets, still reacting to US President Donald Trump’s recent decision to impose tariff hikes.

The Saudi stock market rose 1.1%, closing at 11,194 points, up 117 points. The market recorded active trading, with total turnover reaching approximately 10.6 billion riyals ($2.8 billion), the highest since December 2024.

Despite a sharp decline of over 400 points earlier in the session, which brought the market to a low of 10,657 points, it successfully recovered to end the day higher. On Sunday, the market had dropped by more than 800 points.

ACWA Power led the gainers, jumping 6.8% to close at 331 riyals. Aramco shares also rose 1%, reaching 25.25 riyals.

Meanwhile, Al Takaful Cooperative saw a 5% increase, closing at 131 riyals, following the company’s announcement of cash dividends for shareholders.

These movements come as markets absorb the shock of the tariff hike, with Gulf financial markets showing mixed performance following sharp declines in reaction to Trump’s decision to raise tariffs.