Bahrain raised $3bn in a three-part international bond sale, its biggest ever syndicated debt sale, as part of efforts to bolster public finances.

According to a report by Bloomberg, the bond sale included an $850m Islamic bond, a 12-year $1.25 bond and a $900m 30-year bond.

The sale is being arranged by France’s BNP Paribas, US-based Citigroup, the local Gulf International Bank, Us-based JP Morgan Chase & Company and the National Bank of Bahrain.

Bahrain is using the international debt market to boost government finances since the oil price dropped in 2014. Bahrain’s fiscal deficit was 18 per cent in 2016, and government debt rose to 82 per cent of GDP.

In its most recent Article 4 consultation on Bahrain, published on 22 August, Washington-based IMF called for Bahrain to continue cutting spending while also introducing new taxes such as VAT in order to offset the increased economic risks caused by the fall in oil prices.

In the consultation, the IMF called for Manama to reduce the government wage bill and to further cut energy subsidies, while raising non-oil revenue, including through VAT and other revenue measures. It also called the privatisation of state industries and utilities.

The IMF report highlights Bahrain’s positive economic and fiscal performance in 2017 following a tough 2016, but it said that economic growth in Bahrain would slow to about 1.6 per cent in 2018 down from 2.3 per cent in 2017 as a result of “ongoing fiscal consolidation and weaker investor sentiment” in the kingdom.

Despite the slowdown in headline economic economic growth, the fund praises Manama’s drive for tighter fiscal discipline. It reports that Bahrain’s fiscal deficit will fall to 12.2 per cent of GDP in 2017, down from 18 per cent in 2016, owing to higher oil prices and continued reduction in spending.

But it says the deficit will narrow only slightly over medium term because of rising interest payments that will limit the revenue gains from the planned implementation of the VAT in 2018.