Bahrain Mirror: The International Monetary Fund (IMF) estimated that the fiscal deficit of the Bahraini government would reach approximately 15% of the Gross Domestic Product (GDP) during 2016, with the drop of oil prices to lowest rate since 12 years.

In a press release the IMF said that the falling oil prices has affected the Bahraini economy and massively reduced export revenues and state budget.

"Lower projected oil prices in 2016 imply that the overall fiscal deficit will remain high at over 15 percent of GDP, and narrow only gradually over the medium term. A substantial increase in debt is projected. A sizable fiscal adjustment is urgently needed to restore fiscal sustainability, reduce vulnerabilities, and boost investor and consumer confidence," it added.

The IMF estimates indicated that Bahrain's GDP was up 3.2% in 2015 and should climb 2.25% this year, or half the 4.5% growth seen in 2014. According to the Fund, the country's debt amounts to 63% of GDP, with the fiscal deficit tantamount to 15%. Both the debt and the deficit need reducing, according to the IMF.

The local government has taken a few measures to correct the economic imbalances. Fuel, water and electricity prices were raised, but it wasn't enough, the IMF remarked.

IMF technicians suggested, among other actions, the levying of a value-added tax on par with those of other Gulf countries and "rationalization" of spending on social transfers. The IMF noted that the country could cut costs by freezing civil servants' wages. It further advised the government to support private sector jobs for Bahraini nationals.

Arabic Issue