Bahrain must reform state finances urgently, IMF official urges

Bahrain should consider revising its subsidy system to make it more efficient while curbing a large public sector wage bill, a senior IMF official said. (AFP)
Updated 31 May 2018
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Bahrain must reform state finances urgently, IMF official urges

DUBAI: Bahrain must urgently reform its finances to cut a large state budget deficit and support its currency, a senior International Monetary Fund official said after annual consultations with the government.
Fiscal steps which the government has already announced would cut the deficit to 11 percent of gross domestic product in 2018 from 14 percent last year and around 18 percent in 2016, Bikas Joshi, who led an IMF mission to Manama, said in a statement late on Wednesday.
But without further measures, non-oil revenue will stagnate and economic growth will slow, Joshi said, noting that public debt increased to 89 percent of GDP last year and foreign reserves were low, covering only 1.5 months of non-oil imports.
The cost of insuring Bahrain’s sovereign debt against default jumped near multi-year highs this month because of investors’ concern over the country’s debt burden as US interest rates rise.
“Fiscal consolidation would support the peg to the US dollar, which continues to provide a clear and credible policy anchor,” Joshi said.
He added that Bahrain should, for example, consider revising its subsidy system to make it more efficient while curbing a large public sector wage bill.
However, Bahrain’s financial sector is stable, thanks to big capital buffers, and GDP is expected to grow 3.2 percent in 2018 on the back of a recovery in oil production, infrastructure projects and rising refinery and aluminum production capacity, Joshi said. GDP grew around 3.8 percent in 2017.


Mubadala goes fishing for deals in the Mediterranean

Updated 1 min 14 sec ago
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Mubadala goes fishing for deals in the Mediterranean

LONDON: Mubadala has netted a major fish farming deal as the Abu Dhabi-based strategic investment company targets the aquaculture sector.
Andromeda Group, a European firm with fish farming operations in Greece and Spain, has acquired stakes in two companies called Nireus and Selonda that mainly farm Sea Bream and Sea Bass.
Mubadala, which jointly owns Andromeda with AMERRA Capital Management, is a shareholder in the combined business.
“With our focus on aquaculture and agriculture investments, we are excited by the synergies that can be created between these companies,” said Thor Talseth, Andromeda group chairman. “We believe that significant value can be created by building on the comparative advantages of the Mediterranean aquaculture sector.”
Sovereign investors across the region are increasingly investing in food resources on land and sea as a growing global population needs feeding.
“Mubadala took the decision last year to build its presence in the agribusiness sector, which is strategically important to the global economy and has significant potential for value capture,” said Elham Al-Qasim, Mubadala’s agribusiness director. “Aquaculture is one of the most promising sub-sectors, where the deployment of new technologies can drive productivity improvements and accelerate growth.”
Mubadala’s global investment portfolio is valued at some $127 billion with assets spanning finance, energy, defense, real estate and health care.