Bahrain on Monday unveiled a series of fiscal reform measures, including increases in fuel prices, higher electricity and water tariffs, larger dividend contributions from state-owned enterprises, and the introduction of additional fees and taxes.
As one of the Gulf’s smaller oil producers, Bahrain has stepped up efforts to diversify its economy beyond hydrocarbons into sectors such as tourism, financial services, and logistics. However, weaker oil prices have continued to weigh on economic growth and public finances.
According to a government statement, Bahrain also plans to raise natural gas prices for businesses, reduce administrative government spending by 20%, and introduce a new corporate income tax law for domestic companies. The statement did not provide a timeline or further details on when the measures would be implemented.
In November, ratings agency S&P Global downgraded Bahrain’s sovereign credit rating to “B” from “B+” due to rising government debt, increasing pressure on debt servicing costs. S&P also forecast a wider fiscal deficit of 7.6% of GDP in 2025, up from an earlier estimate of 7.1%.
The government has raised $5 billion in global debt markets this year, benefiting from strong investor demand, particularly for Islamic bonds, or sukuk.
Meanwhile, Bahrain’s government and parliament, the Council of Representatives, have held several meetings to discuss steps to support public finances. In a separate statement dated December 28, the parliamentary speaker noted disagreements over how higher electricity and water charges should be applied.
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