Bahrain should move faster to diversify government revenue and cut spending in order to bolster its finances, according to a top IMF official. The Gulf’s most-indebted nation needs to “accelerate the program of fiscal reforms” while keeping fiscal policy “tight” in order to signal to investors it is serious about tackling government borrowing, Jihad Azour, IMF Middle East and Central Asia director, said in an interview.
S&P Global Ratings downgraded Bahrain further into junk bond status last month, citing its rising debt levels. The IMF says Bahrain’s debt-to-GDP ratio could rise to 139% in 2028.
Bahraini officials say the country is attracting foreign investment, growing non-oil revenues, and taking measures to address government debt. But the challenge it faces is how to compete with larger neighbors like Saudi Arabia and the UAE for investment and talent.