Bahrain’s Troubled Banking Sector Set For Turbulent Times

Once seen as the Middle East’s banking center, Bahrain’s financial sector is in terminal decline. Seeking to finance its budget deficits, Manama has increasingly turned to its banks and their credit profiles are now inescapably intertwined.

Since the outbreak of the Arab Spring in 2011, Bahrain’s banking and finance sector has faced a considerable slew of challenges – challenges that show no sign of abating.

The government’s finances have been hit hard by the crash in oil prices since the end of 2014, forcing it to tap the bond markets in an effort to plug its budget deficit and leaving it grappling with ballooning public debt.

The IMF said on 15 July it “welcomed the authorities’ continued fiscal reform efforts, but observed that public debt is expected to increase further over the medium term and reserves are projected to remain low.” (CONTINUED - 2206 WORDS)