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Addicted to Borrowing: Bahrain Once Again Borrows Money Despite Increase in Oil Prices

Bahrain Mirror (Exclusive): The government of Bahrain has hired a group of banks to arrange contacts with investors ahead of a planned issuance of dollar-denominated Sukuk and bonds, Reuters reports.
ABC, Citi, First Abu Dhabi, HSBC, JP Morgan, NBB and Standard Chartered will arrange contacts with investors.
This is likely to be followed by a sale of more than seven-year sukuk and conventional 12-year bonds, depending on market conditions.
This news is tantamount to announcing a serious government failure to reform the country's finances.
The surpluses of high oil prices or the increase in the tax rate didn't help the government reduce its need to borrow and raise debt interest, which may mean that there is a hypothesis that someone is seeking in one way or another to bankrupt the public treasury, to collect private wealth from the state.
Local banks that lend the state are owned by well-known families, including the ruling family.
We can recall what was mentioned in the National Audit Office report for the years 2021 and 2022, which stated that Bahrain's public debt and interest reached dangerous figures.
The bitter truth is that the government has turned Bahrain into a sick country addicted to debt and aid. All the economic plans announced by the authorities have failed after it was found that they did not make use of two important opportunities, the first is the end of the Coronavirus pandemic crisis, and the second is the significant increase in oil prices.
The National Audit Office figures said that the listed and unlisted total public debt in the records of the Ministry of Finance and National Economy as of December 31, 2021, amounts to about 19 billion dinars ($50.4 billion).
The government's trend to borrow again comes days after the government promoted through the Minister of Finance unprecedented positive economic figures, including non-oil GDP growth of 6.2% in 2022, the highest rate since 2012, exceeding the 5.0 % growth target under the economic recovery plan, according to government figures.
The new reports of borrowing raise concerns, especially with the increase in total loan interests or the so-called "debt service". On March 22, the Ministry of Finance reported in an official statement that the annual interest cost of public debt in 2022, according to preliminary results, reached about BD 737 million.
In addition, on April 2, during the joint government-parliamentary meeting held on the draft state budget law, the government informed the MPs that the surplus in the 2022 budget was fully consumed in paying public debt interest, with a decrease of public debt from 114% to 100% of GDP in 2022.
Borrowing again means that interests will increase again, and that the surpluses that will be achieved from the current oil price hike, especially after OPEC Plus decision to reduce production, will face the same fate.
The new surplus will disappear again, just as the surpluses of the past two years disappeared along with the citizens' dreams to improve their living conditions or their salaries. The only thing that has certainly improved is the wealth of the ruling family and their growing financial advantages that are burdening the country and its people.

Arabic Version