The Gulf Cooperation Council (GCC) countries enjoy satisfying sovereign credit ratings with minor exceptions. In a way, the ratings are supported by the absence of a serious debt problem except in Bahrain’s case.

Notably enough, Abu Dhabi, Qatar and Kuwait share similar credit ratings as assigned by Moody’s and Standard & Poor’s, the two leading names in the field. Moody’s assigns a rating of Aa2 for Abu Dhabi, Qatar and Kuwait, a highly sought sovereign rating and indicating optimum ability at paying off short-term debt. The prime-1 rating comes after those of Aaa and Aa1.

S & P’s grants a similar rating, namely AA to Abu Dhabi, Qatar and Kuwait, suggesting capability in meeting financial obligations. This is the second best rating after AAA within the S & P’s scale. Not surprisingly, only a handful of countries such as Norway have the best rating.

Bahrain is the sole GCC state with ratings outside of the A category. It has a rating of Baa2 and BBB on Moody’s and S & P scales.

The GCC’s upbeat ratings partly reflect notable financial positions, as evidenced by the ability in posting substantial budgetary surpluses. For instance, Saudi Arabia posted a surplus of $55 billion in fiscal year 2013, or more than 7 per cent of the kingdom’s gross domestic product (GDP).

In reality, Saudi authorities succeeded in using successive budgetary surpluses to retire public debts, currently at an estimated 10 per cent of the kingdom’s GDP.

Bahrain’s outstanding public debt stands at $14 billion or 46 per cent of GDP, the worst among GCC economies. The IMF has publicly warned of the debt levels rising in years to come, reaching 61 per cent of the GDP in 2018. Suggested solutions require painstaking sacrifices such as limiting growth of public sector spending and re-engineering the subsidies programme. At the moment, the amount spent on subsidies, estimated at $3.3 billion, accounts for 11 per cent of the GDP, something not sustainable.

As for the Moody’s outlook is concerned, GCC countries are in positive territory except for Bahrain. Bahrain’s rating is constrained by a lack of progress on the political front ever since February 2011 when popular calls were first made to address the socio-political challenges facing the country.

These constraints help explain Bahrain’s relatively weak performance by regional standards in a key report. The 2013-14 Global Competitiveness Report, published by the World Economic Forum, assigns ranking numbers 13 and 43 for Qatar and Bahrain, in turn the best and worst among GCC countries.

It is not unfair to assert that at least some GCC countries deserve better credit ratings than currently assigned. With a sovereign wealth fund of nearly $1 trillion, the UAE for instance is a global leader on this score. The UAE alone accounts for 15 per cent of SWFs worldwide.

Possibly, Saudi Arabia deserves stronger ratings, currently at Aa3, on Moody’s and AA- for S & P. In addition to notable budget surpluses plus a favourable balance of trade thanks to oil business, Saudi Arabia is the world’s largest oil producer.

Needless to say, maintaining the current ratings is a challenge for GCC countries at large. In reality, streamlined credit ratings should not be ruled out.

The writer is a Member of Parliament in Bahrain.