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
0

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.


Saudi Arabia to remain oil exporting kingpin says IEA boss

Updated 7 min ago
0

Saudi Arabia to remain oil exporting kingpin says IEA boss

  • IEA Executive Director Fatih Birol: The Middle East and especially Saudi Arabia will remain the largest exporter of oil for many years to come
  • Fatih Birol: For this year, let’s pay special attention to US shale because some observers last year made wrong assumptions and underestimated US shale growth

LONDON: Saudi Arabia will remain the largest global oil exporter for years to come despite the growth of the US oil sector, according to the chief of the International Energy Agency (IEA).

IEA Executive Director Fatih Birol told the World Economic Forum in Davos that despite a rapidly changing global energy sector, the Kingdom would remain a key player.

But he added that the importance of the US shale sector should not be underestimated as it had been in the past.

“The Middle East and especially Saudi Arabia will remain the largest exporter of oil for many years to come,” he told an energy panel at the annual gathering of global political and business leaders in the Swiss mountain resort.

Official data from Saudi Arabia released on Monday showed the Kingdom’s crude oil exports in November rose to 8.235 million bpd from 7.7 million in October.

“The US produce a lot of oil but most of the time they use that at home for domestic purposes. So even though US is now a very important oil producer, the Middle East will remain the largest exporter of oil.

“But for this year, 2019, let’s pay special attention to US shale once again because some of the observers last year I think made wrong assumptions and underestimated US shale growth,” said Birol.

The huge growth of the US shale oil industry has transformed the energy landscape in the US, which until last month had been a net importer of oil for the last 75 years.

Oil prices fell nearly 2 percent on Tuesday, pushed lower by signs of a slowdown in China.