CBB welcomes global vote of confidence for Bahrain

Well-respected international rating agency, Fitch, upgraded yesterday (24 August 2007) 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.

"As the Kingdom's central bank and regulator of Bahrain's international financial centre, the CBB welcomes global votes of confidence for Bahrain's continued economic success," said Mr. Rasheed Mohammed Al Maraj, Governor of the Central Bank of Bahrain (CBB).

"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%, compared to 4-5% in past years. For 2006, real economic growth is estimated at 7.1%, 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," said Mr. Al Maraj.

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% for 2006.

"The general stability of the financial sector and the overall growth-oriented economic climate point to a favourable outlook for Bahrain in the years to come," said Mr. Al Maraj.

"The CBB, on its part, 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."