The International Monetary Fund (IMF) stated that Bahrain's economy will gradually recover from the COVID-19 pandemic, and is expected to grow by 3.3% this year after contracting by 5.4% in 2020.
The IMF announced that Bahrain's public debt rose to 133% of GDP last year compared to 102% in 2019. As the recovery strengthens, the bank stated in a release today, there will be a need for an ambitious and growth-friendly fiscal adjustment within a credible medium-term framework to address significant imbalances in Bahrain, place government debt on a steady downward path, and restore macroeconomic sustainability. The bank further noted that the adjustment will also help rebuild external reserves and strengthen the currency peg, which continues to meet Bahrain's needs as a pillar of monetary policy and support access to sustainable external financing. According to the fund, Bahrain moved swiftly to address the health and economic repercussions of the COVID-19 pandemic, as it quickly made vaccines available to those in greatest need and provided liquidity to businesses severely affected by strict lockdown measures. The IMF also welcomed support from the Central Bank of Bahrain for banks, but warned of potential credit risks amid weak growth.
