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IMF Executive Board Concludes 2016 Article IV Consultation with Bahrain
IMF Press Release (2016)
  • Alberto Behar
Abstract
On March 30, 2016, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV Consultation1 with Bahrain.
The decline in oil prices adversely affected Bahrain’s fiscal and external balances. GDP growth slowed to an estimated 3.2 per cent in 2015 from 4.5 percent in 2014. Fiscal and external buffers are limited and vulnerabilities rose. Consumer and investor sentiment weakened. Bank deposit growth slowed and excess liquidity fell. However, the banking sector remains well-capitalized and liquid.
In recent months, authorities have implemented significant fiscal adjustment measures, including reforms of energy prices. Gasoline prices have been raised by nearly 60 percent, while prices of diesel, kerosene, natural gas, and electricity and water tariffs are being adjusted gradually over the medium term. Tobacco and alcohol taxes have been increased.
In 2016 and 2017, growth is expected to slow further on account of the fiscal adjustment and weaker investor sentiment. Inflation is expected to rise modestly in 2016 with the increase in energy prices, and ease over the medium term with weak economic activity containing the pass-through to wages. Despite the implementation of fiscal measures, lower oil prices imply that the fiscal deficit is projected to reach 19.5 percent of GDP in 2016 and remain high over the medium term. The current account deficit is projected to reach over 8 percent of GDP in 2016 and narrow gradually. Financial outflows are expected to continue.
Disciplines
Publication Date
Spring 2016
Citation Information
Alberto Behar. "IMF Executive Board Concludes 2016 Article IV Consultation with Bahrain" IMF Press Release (2016)
Available at: http://works.bepress.com/alberto_behar/47/