Falling oil prices push Bahrain further into the red. But it is believed that it is still set to post respectable economic growth for the year, buoyed by a solid performance from its non-hydrocarbons sector.
There has been a sharp decline in oil prices which saw Bahrain?s revenue trimmed in the second half of 2014, while earnings look likely to fall at a similar rate in 2015.
Its ?budget deficit widened towards the end of the year, exacerbated by lower oil prices, and it is forecast to rise to 6.2% of GDP in 2015 from an estimated 3.7% of GDP in 2014.
It is obvious that the Nation is coming under pressure due to its relatively low levels of reserves and high break-even prices, with oil needing to return to $117 per barrel for Bahrain?s budget to balance this year, according to a report issued by Moody?s Investors Service in early December.
According to Standard & Poor?s (S&P), a rating Agency, it made similar observations when in mid-December, it revised its economic outlook for Bahrain from stable to negative, citing the drop in oil prices as its main reason.
Bahrain receives a large portion of its state budget revenue from the Abu Safa oilfield, which it shares with Saudi Arabia. and also lower non-oil exports to other regional markets.
S&P?mentioned that?that Bahrain?kingdom?s vulnerabilities were mitigated by expectations of continued support from other members of the GCC. This comes despite increasing demands for social expenditure.
Notwithstanding, there have been talks that the Bahrain?s new Cabinet could opt to reduce public spending, rather than increase debt levels, in 2015.
It was established that Bahrain boosted its annual budget expenditure by nearly 24% between 2010 and 2012 after protesters took to the streets of Manama in early 2011 demanding political reforms.