More steps needed to cut fiscal deficit, IMF tells Bahrain

Bahrain needs a comprehensive package of reforms to reduce its fiscal deficits over the medium term, the International Monetary Fund (IMF) said.

“Despite planned fiscal consolidation measures, fiscal deficit is projected to continue over the medium term,” IMF’s Executive Board said in a report yesterday.

The IMF emphasised the need to “introduce direct taxation, including a corporate income tax, while containing the public wage bill” and said Bahrain’s exchange rate peg to the dollar “remains appropriate for the economy.”

The country’s economy is forecast to grow 3.2 per cent this year, according to the IMF. The fund, while praising Bahraini authorities continued efforts for fiscal reforms, warned against risks from tighter global financing conditions and delays in fiscal adjustments.