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Bahrain economy wins key vote of confidence

MANAMA: Bahrain's economic performance and management of the domestic economy has been given a vote of confidence by a leading global rating agency.

International rating agency, Fitch, yesterday reaffirmed Bahrain's long-term foreign currency Issuer Default Rating (IDR) at "A" and long-term local currency IDR at "A+", both with stable outlooks.

The country ceiling is also affirmed at "A+".

Continuous growth in Bahrain's non-oil sector as well as enhanced political and economic reforms were taken into account by Fitch for the rating reaffirmation.

"Bahrain's economy has grown by 6.3 per cent in constant prices in 2008," said CBB Governor Rasheed Al Maraj.

"The financial sector remains the largest contributor to the economy representing around 27pc of real GDP," he added.

"We are very pleased to welcome this reaffirmation of Bahrain's sovereign credit rating, especially in light of the current international market situation, and the sharp decline in oil prices in comparison to last year," said Mr Al Maraj.

"This rating is a testament to the kingdom's strong position as the centre for banking and finance.

"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."

Fitch has assigned Bahrain's forthcoming $500 million, five-year sovereign sukuk issue a 'A' rating, in line with its long-term foreign currency IDR.

"Bahrain can finance higher fiscal deficits resulting from the downturn in world oil prices without undue strain on its debt ratios, while the wholesale and domestic banks have for the most part been resilient to financial shocks," said Fitch's Sovereign team associate director Charles Seville.

The wholesale banking sector appears to be weathering the global banking crisis, but medium-term concerns persist, it said.



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