The move by Standard & Poor’s lowering Bahrain’s long-term, short-term and local currency sovereign credit ratings from BBB/A-2 to BBB/A-3 further adds to the economic challenges confronting the kingdom. For sure, the change in rating status was not restricted to Bahrain, as S&P also went on to cut the rating for Oman and reduced the outlook for Saudi Arabia from positive to negative.

Undoubtedly, the sharp drop in oil prices prompted S&P to assume such steps concerning some — but not all — members of the Gulf Cooperation Council. However, the timing of the move was a peculiar one for Bahrain by virtue of it coinciding with the fourth anniversary of the February 2011 protests related to the country’s socio-political and socioeconomic challenges.

Worryingly, all the leading rating agencies have adopted a negative outlook for Bahrain’s economy. In fact, Moody’s was the first to undertake such a step long before the dramatic fall in oil prices. It spotted a structural problem in the country’s fiscal status, with revenues not matching the rise in spending. The authorities have been under pressure to incur steady rises in expenditure partly to alleviate concerns that had contributed to the unrest in the past.

In a surprising, but understandable, development, the Economic Development Board, better known as EDB, has reduced projections of growth for gross domestic product (GDP). The state body is entrusted with setting economic policies and strategies for Bahrain. The EDB puts real GDP growth rate for 2015 and 2016 at 3.6 and 3.3 per cent, respectively, down from 4.2 per cent in 2014 and 5.3 per cent in 2013.

Clearly, blame for slower economic growth reflects the drop in oil prices and with its adverse effects on treasury revenues and expenditure.

Another challenge concerns governmental debt levels. The total outstanding debt had decreased slightly towards end-2014 reflecting the retirement of some dated bonds. Nevertheless, the outstanding amount remains serious by virtue of comprising more than 40 per cent of GDP in 2014, up from 10 per cent in 2008.

The IMF warns that unless addressed, debt levels could reach as high as $20 billion — or 61 per cent of GDP — by 2019. The Gulf Monetary Union project, which went into effect in 2010 with four states, restricts outstanding debt to 60 per cent of GDP.

Unemployment among locals is another serious concern. According to a report — ‘Rethinking Arab Employment’ produced by the World Economic Forum — jobless rates in Bahrain are a matter of anxiety. It puts unemployment rates at 7.4 per cent, making it the second-worst among GCC economies after Oman, which suffers to the tune of 8.1 per cent.

Not surprisingly, the figure issued by WEF contradicts official statistics, which puts it at 3.7 per cent. The country’s Ministry of Labour avoided challenging WEF’s statistics.

Unemployment among local youths is especially worrying, standing at 27.5 per cent or close to that of 27.8 per cent in the case of Saudi Arabia, the worst within the GCC.

The employment challenge becomes more complex when considering the status of disguised unemployment and underemployment. This relates to those engaged in part-time work, as well as accepting job offers below their qualifications. But will have to keep relying on the availability of qualified human resources both within and from the rest of the GCC.

The writer is a Member of Parliament in Bahrain.