The International Monetary Fund on Monday warned Bahrain of its rising government debt, urging the kingdom to adopt fiscal measures.
After discussions with officials in Manama between November 9 and 20, IMF staff said Bahrain's fiscal position “continued to deteriorate last year”. The fund said the kingdom's overall fiscal deficit to gross domestic product rose 11 per cent, with gross government debt to GDP increasing to more than 11 per cent.
The fund said inflation rose only modestly last year, while growth was resilient, amid tight financing conditions and geopolitical uncertainty. However, it warned that the kingdom's debt-to-GDP ratio is expected to further increase if new fiscal measures are not put in place.
“To bring debt down durably and reduce risks, the priority is to commit to a steady, multi-year fiscal consolidation package, with efforts appropriately staggered to smooth the adjustment, alongside structural reforms to boost growth,” IMF mission chief John Bluedorn said in a statement.
The fund called on Bahrain to adopt measures including the introduction of a general corporate income tax and reduce broad energy subsidies, while using social transfers to protect vulnerable households.
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