Saudi Arabia, Kuwait and the UAE are expected to announce an integrated programme to enhance Bahrain’s fiscal situation, a statement carried by the Saudi Press Agency (SPA) said on 26 June.
The three countries “are in discussions with the authorities …. to enhance the stability of the financial situation in [the] Kingdom of Bahrain and to confirm their commitment to consider all options to support the kingdom,” the statement said, adding that an integrated programme will soon be announced to enable Bahrain to support its economic reforms and fiscal stability.
No details were provided as to the nature or value of the planned programme or intervention.
The Bahraini dinar, the local currency, sank to a 17-year low – at 0.38261 to the dollar – on 26 June, according to UK-based news agency Reuters. This followed hedge funds' dumping of Bahraini bonds because of concern about the country’s rising public debt.
The Washington-based International Monetary Fund (IMF) said earlier this month that Bahrain's public debt had increased to 89 per cent of its gross domestic product (GDP), while current account deficit remained unchanged at 4.5 per cent.
Bikas Joshi, who headed the most recent IMF mission to Bahrain, noted that the country’s reserves remain low, covering only 1.5 months of prospective non-oil imports at the end of 2017.
IMF urged Manama to continue with economic reforms, including the implementation of value-added tax (VAT), to avoid stagnation of its non-oil revenue.
In addition to rising public debt, Bahrain is also struggling with a substantial fiscal deficit, which is expected to reach 11 per cent of GDP this year.
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