Bahrain financial deficit set to fall this year

Bahrain financial deficit set to fall this year

Bahrain’s financial deficit is project to improve 12.2 % of GDP in 2017. From 18 % last year owing to higher oil prices and continued reduction in spending. Bahrain financial deficit set to fall this year.

The real GDP growth is expect to slow to 2.3 % in 2017 and 1.6 % in 2018. Reflecting the ongoing fiscal consolidation and weaker investor sentiment.

Bahrain financial deficit set to fall this year

According to the IMF executive directors considered that. The economic activity and financial market conditions have remained positive, fiscal and external vulnerabilities have increased in the wake of the oil price decline.

While welcoming the significant fiscal measures under way. They stressed that an additional sizable and front loaded fiscal adjustment is urgently needed to restore fiscal sustainability and reduce the large fiscal and external financing needs.

Sustained fiscal efforts will be need over the medium term to put debt on a down ward path and rebuild policy space.

Further that the directors recommended measures to contain current expenditure. Including the wage bill and reducing energy subsidies. While raising non oil revenue, including through the VAT and exploring other revenue measures.

They are also advise to strengthening revenue administration and establishing a medium term fiscal framework to support fiscal consolidation.

The IMF directors agreed that the exchange rate peg remains appropriate for Bahrain. Noting that it has delivered monetary policy credibility and low inflation. Strong fiscal adjustment, sizable external financing, and structural reforms are need to support the peg and strengthen the international reserve position.

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