The International Monetary Fund (IMF) has called on the Bahrain government to take further action including the imposing of corporation tax to shore up its finances. "Over the medium term, the deficit is projected to remain sizable, with a rising interest bill as public debt cont
The International Monetary Fund (IMF) has called on the Bahrain government to take further action including the imposing of corporation tax to shore up its finances.
“Over the medium term, the deficit is projected to remain sizable, with a rising interest bill as public debt continues to increase. Without further measures, non-oil revenue is expected to stagnate and growth to slow,” said Bikas Joshi, the official who led the IMF team that visited Bahrain.
He went on to say that a “large fiscal adjustment is a priority” for the country for attaining long-term growth. “Such a plan should comprise revenue and expenditure measures while protecting the most vulnerable,” he said.
“The implementation of a value-added tax, as planned, would be important. Additional revenue measures—including consideration of a corporate income tax—would be welcome. Consideration should also be given to better targeting subsidies and address the large wage bill.”
Praising the positive sides of Bahraini economy, the fund said the country’s banking system remains well capitalised and liquid and the economy is being boosted by a recovery in oil production and rising refinery and aluminium production capacity. And the country received a boost in early April with the discovery of large new oil and gas reserves, the fund observed.
