Bahrain must urgently reform its finances to cut a large state budget deficit and support its currency.
The statement came from a senior International Monetary Fund official.
The fiscal steps which the government has already announced would cut the deficit to 11 per cent of gross domestic product in 2018 from 14 per cent last year and around 18 per cent in 2016, said Bikas Joshi, according to Reuters.
The cost of insuring Bahrain’s sovereign debt against default jumped near multi-year increased this month because of investors’ concern over the country’s debt burden as US interest rates rise.
However, Bahrain’s financial sector is stable, thanks to big capital buffers, and GDP is expected to grow 3.2 per cent in 2018 on the back of a recovery in oil production, infrastructure projects and rising refinery and aluminum production capacity.