IMF says Bahrain's growing debt may be unsustainable by 2018
According to the International Monetary Fund, Bahrain must urgently cut spending or risk unsustainable public debt as its fiscal deficit widens and oil prices decline. The smallest Gulf crude producer needs gradual fiscal consolidation equal to 7.7% of economic output over the next six budget years to contain its government debt at 40% of gross domestic product. IMF also recommended that Bahrain pare its fiscal stimulus to 0.9 percentage points of non-oil GDP from 2.1 percentage points. Bahrain’s outstanding debt including interest is about US$11.8 billion, with more than US$3 billion due this year. Moreover, investment in Bahrain’s private sector remains low, which may translate to non-oil growth of less than 4% in 2013. Bahrain is also vulnerable to oil price fluctuations.
Syndicate
