Credit rating downgrade chance over virus threat

TDT | Manama

Gulf countries such as Bahrain and Oman could be at risk of a credit rating downgrade by if the coronavirus crisis continue to drag, according to a major credit rating agency S and P. If the coronavirus epidemic continue to deepen, countries such as Bahrain and Oman could take a hit, according to S and P. 

“If you exclude the investment proceeds from the sovereign wealth funds, every single Gulf economy is running pretty substantial underlying fiscal deficits,” he added. “You have pretty high break even oil prices,” he said, singling out Oman and Bahrain. 

“They do stand out.” According to the IMF, Bahrain’s fiscal break even oil price is projected to be 91$ per barrel while Oman’s is $87.60 a barrel. “Bahrain is working very hard to diversify and find nonoil revenues,” he said. “But they are where they are in terms of regional exposures, and the key export of this part of the world is clearly crude oil,”  he added. 

The coronavirus epidemic has already disrupted economic growth in China and a further spread to other countries could derail a “highly fragile” projected recovery in the global economy in 2020, the International Monetary Fund has warned. In a note for G20 finance ministers and central bankers, the global lender mapped out many risks facing the global economy, including the disease and a renewed spike in US-China trade tensions, as well as climate-related disasters.

IMF Managing Director Kristalina Georgieva said the outbreak was a stark reminder of how unforeseen events could threaten a fragile recovery, and urged G20 policymakers to work to reduce other uncertainties linked to trade, climate change and inequality. “Uncertainty is becoming the new normal,” Georgieva wrote in a blog posted on the IMF website. “While some uncertainties — like disease — are out of our control, we should not create new uncertainties where we can avoid it.”