Bloomberg: Bahrain’s economy needs Gulf support

 The US economic agency "Bloomberg" reported that despite the recent rise in oil prices, Bahrain, which is the weakest link of the rich Gulf Cooperation Council economies, still needs a rescue.

The agency stated in a report on Friday that Bahrain needs the price of a barrel of oil to be above $88 in order not to record a budget deficit this year, according to the International Monetary Fund, which is the highest price compared to the needs of other Gulf countries.

She added that Bahrain is preparing to take advantage of rising oil revenues in the coming months to fund budget deficits that have widened in the wake of the pandemic and have left it lagging behind its neighbors, the world's largest energy exporters.

She pointed out that Bahrain actually benefited from Gulf support of $5.6 billion, with $500 million granted for development projects during the first three months of this year.

"Ambitious reform is required to address Bahrain's large financial imbalances," said Scott Livermore, chief economist for the Middle East at Oxford Economics in Dubai, noting that the Gulf kingdom will need more Gulf support in the medium term.

But Bahrain's Minister of Finance, Sheikh Salman bin Khalifa Al Khalifa, told the agency that his priority at the moment was to restore economic growth rather than increase revenues.

"We really want to see the recovery take hold before we take any additional steps in this regard," he said.

The International Monetary Fund expects Bahrain's reserves to average $2.5 billion in 2022, covering only 1.2 months of imports.

Bahrain's budget deficit is likely to reach about 9% of economic output this year, more than double Oman's deficit of 2.4%, according to International Monetary Fund data.

And the chief analyst on Bahrain at the "Fitch" credit rating agency had previously suggested that Manama would need more financial assistance from its Gulf neighbors starting in 2023.

In April, Moody's credit rating agency revised Bahrain's outlook to negative with a B2 rating.

The new epidemic of the Corona virus has affected Bahrain as a result of the drop in oil prices, in addition to the economic closure that has continued for intermittent periods since March 2020.