The IMF has warned Bahrain that it “urgently” needs to cut spending or raise taxes in order to keep its mounting debt burden under control. In a review of the country’s economy published in late January, the fund acknowledged some recent budget reforms — including a corporate income tax and changes to utility prices — but said more changes were needed. “Delayed or insufficient fiscal adjustment could exacerbate debt sustainability concerns and financing challenges,” it added.
Bahrain’s budget deficit rose to 11% of GDP in 2024, while its overall debt-to-GDP ratio increased to 134%. Credit ratings agencies have taken a dim view of its finances, with the country’s sovereign debt now deep in junk bond territory.