São Paulo – In 2011, Bahrain suffered from political instability and demonstrations that caused investors to flee and led to a loss of foreign exchange reserves. Nevertheless, the Bahraini Gross Domestic Product (GDP) in 2011 is likely to have increased, thanks to oil export revenues. These conclusions were drawn by a report on the country’s accounts issued by the International Monetary Fund (IMF) this Tuesday (24th).
According to the survey, economic issues caused by the protests were stronger in the first half of the year. Still, publicly listed companies were able to profit and the granting of credit grew again, albeit slowly. “The macroeconomic impact of the unrest has been cushioned by the largely unaffected oil and aluminium sectors—the former contributing over 85% of fiscal and external receipts,” claims the IMF report.
The IMF directors also point out that the amount of non-performing loans has increased among small and medium enterprises. According to the institution, the Bahraini Central Bank must continue to carefully monitor the risks posed to the banking system, and “ensure the effectiveness of the regulatory framework, especially for cross-border issues.”
According to the IMF’s the growth rate of the GDP of Bahrain will be 1.8% in 2011, as against a 4.1% in 2010 and 3.1% in 2009. The estimated growth of the oil industry is 4.1%, as against 0.1% in 2010. As for the non-oil sector GDP, the reality is opposite: the growth rate was 4.6% in 2010 and 1.5% in 2011. Out of US$ 27.7 billion in revenues obtained by the country in 2011, US$ 24.3 billion were oil-related.
Revenues from exports of oil, whose barrel sold for as much as US$ 114 in 2011 (as of 2008, the price of one barrel was US$ 80), helped Bahrain to back the country’s expansionist policy last year. In august, for instance, public servants in the country were given a 15% wage raise.
The IMF believes that the main challenge facing Bahrain this year will be strengthening of its fiscal framework, in order to help control spending and stabilize the debt-to-GDP ratio, i.e., to prevent indebtedness from rising. “They [the Fund’s directors] agreed that the 2013-2014 budget offers the opportunity to lay the foundations for fiscal adjustment over the medium term,” according to the study.
*Translated by Gabriel Pomerancblum
