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Bahrain Mirror (Exclusive): The Bloomberg Sovereign Debt Risk Index stated that Bahrain’s debt is one of the most risky in the Arab world, coming in third after Egypt and Tunisia.

The Bloomberg index measures a set of indicators related to sovereign debt, including the economic growth rate and gross domestic product.

Out of 60 emerging markets around the world - which the index is specialized in - Bahrain ranked 11th in terms of risk, while Kuwait ranked 60th as the owner of the safest sovereign debt.

The ratio of public debt to GDP in Bahrain, according to International Monetary Fund figures, is 124.7%, the highest in the list of Arab countries after Sudan.

The interest due on public debt will reach 767 million dinars in 2023 and 786 million dinars in 2024, according to current estimates.

Bahrain set a ceiling for public debt at 15 billion dinars, but it exceeded it as corruption and monopolization of oil wealth continued, as the actual debt exceeded 19 billion dinars.

It is true that the size of public debt is one of the main factors in the Bloomberg index, but the index measures other factors such as cash reserves, economic growth and diversification of sources of income.

Such figures confirm the failure of government plans to control public debt on the one hand and diversify sources of income on the other hand, as the government’s general budget still depends on the oil sector, which constitutes more than 70% of government revenues.

The huge rise in oil prices contributed to restoring some balance to public finances, but it reinforced the fact that government revenues are primarily based on oil.

For decades, the government has failed to implement strategic projects that contribute to reducing dependence on oil. Government efforts have recently focused on diversifying sources of income on policies to lift subsidies, impose taxes and increase fees on services.

While these measures have contributed to increasing the revenues of the National Revenue Agency, they have also increased the financial burdens imposed on Bahraini citizens who are already suffering from low wages and unemployment.

Expansion into profitable sectors could have generated significant financial revenues instead of a tax policy.

Despite the successes achieved by the Bahrain Refinery and Alba, for example, this did not prompt the government to expand into the manufacturing sectors, and their contribution remained at only 14% of the gross domestic product.

The Alba smelter alone achieved profits estimated at about 400 million dinars last year, which is equivalent to a quarter of oil revenues.

The government has always put forward five-year and ten-year plans to reduce debt or diversify income, but none of that has happened, because they are not serious plans as long as national wealth and sovereign decisions are monopolized by the ruling family.

Kashf Al-Haqaiq Weekly Magazine Editor-in-Chief Jaafar Al-Khabouri