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Bahrain will need more Gulf financial support

Toby Ailes, chief analyst for Bahrain at Fitch Ratings, said on Monday that Bahrain will likely need more financial aid from its Gulf neighbors despite reform measures.

Ailes added that Bahrain – a small oil producer – will likely need support from 2023 onwards, according to Reuters.

In 2018, Saudi Arabia, the UAE and Kuwait announced that they would provide Bahrain with a package of $ 10.25 billion over a 5-year period with zero interest to help it avoid a credit crisis.

Reuters also quoted a few days ago from a document that showed that Bahrain sold bonds in 3 tranches worth two billion dollars, after the Corona virus pandemic and the decline in oil prices exacerbated its financial deficit and increased the total debt owed to nearly 40 billion dollars.

Reuters said at the time that the bond sale comes in light of uncertainty surrounding the future of financial aid for the small oil producer.

Last November, the government of Bahrain approved the 2021 budget with a deficit of $ 3.4 billion, amid declining economic activity due to Corona, according to Anadolu Agency.

The total deficit in Bahrain’s budget in 2021 will increase by 99.8% from the estimate in 2020 at 708 million dinars ($ 1.88 billion).

Bahrain’s total debt amounted to $ 39.8 billion at the end of 2020, rising to 118% of GDP. It had reached 36.1 billion dollars in the previous year, equivalent to 93.8% of the total output.

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