MANAMA: Bahrain’s government has raised its debt ceiling to 15 billion dinars ($39.79 billion) from 13 billion dinars to help finance public spending, the cabinet said on Monday, as low oil prices and the coronavirus crisis have dented state revenues.

The debt ceiling was also increased to pay for other expenditure and to cover debt instalments for the financial years 2020 through 2022, the cabinet said in a statement. Bahrain last raised its debt ceiling in 2017.

The country, which avoided a credit crunch in 2018 with a $10 billion aid package from its Gulf neighbours, bolstered its finances in May with a $2 billion bond issuance to help plug its budget deficit.

The slowdown in economic activity comes despite efforts to achieve the objectives of the fiscal balance program, the cabinet said, noting initiatives that have been achieved to enhance spending efficiency and reduce recurrent government expenditures.

The International Monetary Fund has forecast Bahrain’s fiscal deficit will jump to 15.7% of gross domestic product this year from 10.6% in 2019.

Reuters