The year 2007 was yet another strong growth year for Bahrain’s ever-expanding financial sector.
Bahrain continued to attract new financial institutions during 2007, while the existing industry saw its assets surge to record highs. The Central Bank of Bahrain (CBB), the Kingdom’s central bank and financial services regulator, continued to pursue its goal of advancing the country’s financial services industry, encompassing the banking sector, insurance and the capital markets.
As a central bank, the CBB is responsible for ensuring monetary and financial stability in Bahrain and is continuing the long-standing fixed exchange rate policy against the United States dollar, first established in 1980. This has provided Bahrain with a high degree of economic and price stability, while encouraging the sound growth of the national economy, which has underpinned the growth and development of the country’s flourishing financial services industry. As the country’s financial services regulator, the cornerstone of CBB’s policy continues to be the implementation of international best practice in all aspects of financial supervision, a policy which has helped Bahrain earn its international reputation as the bestregulated financial jurisdiction in the Middle East.
The Kingdom’s financial services industry has surpassed the oil sector as the largest contributor to the national gross domestic product (GDP). The sector’s contribution to GDP in real terms grew 8.2% in 2006 to BD1.05 billion (US$2.79 billion), which represented 25.5% of the total GDP of BD4.1 billion (US$10.9 billion). The expansion of the financial services industry is also evidenced by the continued growth in financial sector employment. During 2006, the industry, comprising banking, insurance and the capital market, added 1,534 new jobs, compared with 677 new jobs in 2005. This raised employment in the financial sector to 9,753 in 2006, from 8,219 in 2005. The 2006 employment numbers represent a yearon- year increase of 18.7% and a 40% increase over the past three years.
Bahrain enjoys a foreign currency debt rating of ‘A’ from international rating agencies Standard & Poor’s (S&P) and FitchRatings.