According to the International Monetary Fund (IMF),Bahrain’s Economy is expected to surge ahead by 1.8% in 2019 as compared to very minimalist growth as seen in 2018.
Bahrain also has received a beneficial monetary aid worth $10 Billion in October 2018, as promised by its neighboring allies Saudi Arabia, UAE and Kuwait to bail them out of economic crisis and help sustain their currency, debt markets in the long run.
They also to adjust their finances released a financial aid programme along with the $10 billion aid as it was devastated with an economic crisis due to the lower oil prices in recent years. It also marks a significant step in Bahrain’s reform agenda and has alleviated near-term financing constraints as quoted by the IMF in a report that was followed by their visit to the country.
However, the worst part is that despite all the initial success, Bahrain’s debt continues rising and stands currently at 93 percent of the total gross domestic product last fiscal year. It’s also predicted to keep growing.
Bahrain government have thus proposed additional reform efforts, coupled in with a clear medium-term agenda that will ensure in a more significant fiscal sustainability.
With all these reforms and due to monetary aid provided as by neighboring countries, Bahrain Economy is expected to grow at 1.8% as projected by the IMF. However, banking, financial institutions, and the Central Bank Governor are optimistic that the growth would be in between 2-2.5%.
2018 was not the best time for Bahrain economy as its economic activity was subdued, with the oil productivity taking most of the pressure as it had declined by 1.2 percent, while non-oil productive standards also shrink in by 2.5 percent as retail, hospitality, and financial services sectors saw a colossal slowdown.
It also suffered a massive blow as the budget deficit fell to 11.7 percent of GDP last year from 14.2 percent in 2017, as a result of higher oil prices, cuts in utility subsidies and new excise taxes as per the estimation from IMF.
IMF also credited that the direct taxation which also includes corporate income tax, is considered to boost the government revenues and increase the Gross Domestic Product (GDP), however, spending reforms should protect the most vulnerable members of the population.
