The International Monetary Fund on Friday urged Bahrain to press on with its efforts to lower government debt after the country's fiscal position took a step back last year.
Bahrain's government gross debt grew to 123.3 per cent of gross domestic product last year, up from 111.1 per cent in 2022. Bahrain's government gross debt is projected to increase to 125.1 per cent of GDP this year and to 128 per cent of GDP in 2025.
Meanwhile, the country's overall fiscal balance fell to minus 8.5 per cent of GDP.
“This marked a change from large improvements over 2021–22,” the IMF said in a news release after its Article IV consultations with the kingdom.
“The authorities agree that fiscal efforts should continue, beyond the conclusion of the FBP this year, to bring government debt significantly down over the medium term.”
The IMF also said Bahrain's ratio of non-hydrocarbon revenue to recurring expenditures was above the kingdom's Fiscal Balance Programme 40 per cent target last year.
The Washington-based lender's executive board also commended Bahrain's economic resilience, which has been supported by efforts to diversify its economy towards the non-hydrocarbon sector.
Bahrain in September introduced a new tax on multinational corporations that analysts believe will help the country's diversification efforts while it remains competitive. Under this domestic minimum top-up tax, multinational companies will be required to pay a tax of at least 15 per cent on profits made inside Bahrain.
The kingdom is among a number of Gulf countries in the middle of diversifying their economies away from oil and gas towards other non-hydrocarbon sectors such as technology and tourism.
Bahrain is also working on a $427 million waterfront development project due to be completed by 2026 in an effort to bring in more tourism.
Government data also shows that sectors such as transport and storage, information and communications, food service and accommodation were among the kingdom's top growing sectors in the second quarter of this year.
Bahraini authorities said they remain committed to implementing diversification efforts, and increasing female labour force participation and private sector employment.
Bahrain's Tourism Minister Fatima bint Jaafar Al Sairafi also announced during the Gateway Gulf 2024 forum this month the construction of 16 new hotels that will add more than 3,000 hotel rooms.
Ms Al Sairafi said the new hotels would help to boost tourism revenue, create hospitality jobs and support small and medium enterprises.
The IMF also encouraged Bahrain to broaden the VAT base, contain the wage bill, reduce extra-budgetary spending and reform energy subsidies.
Bahrain's economy is projected to grow by 3 per cent this year – unchanged from last year's economic growth – before expanding by 3.5 per cent in 2025.
Non-hydrocarbon activity is projected to generate 90 per cent of Bahrain's economy by 2029, with the kingdom's GDP set to expand by 3 per cent in the medium term.
Non-hydrocarbon economic growth is projected at 3.7 per cent this year before increasing to 4.1 per cent in 2025.
Inflation is projected to rise to 1.2 per cent this year after falling to 0.1 per cent last year, before steadying at 2 per cent in the coming years.
“However, uncertainty is high and downside risks large, including from potential escalation and expansion of regional conflicts, commodity price volatility and greater geoeconomic fragmentation,” the IMF said.
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Secret Pigeon Service: Operation Colomba, Resistance and the Struggle to Liberate Europe
Gordon Corera, Harper Collins
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
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LAST 16
SEEDS
Liverpool, Manchester City, Barcelona, Paris St-Germain, Bayern Munich, RB Leipzig, Valencia, Juventus
PLUS
Real Madrid, Tottenham, Atalanta, Atletico Madrid, Napoli, Borussia Dortmund, Lyon, Chelsea
