Bahrain Mirror (2023 Portfolios): On September 26, 2023, King Hamad bin Isa Al Khalifa issued a decree-law raising the public debt ceiling once again to reach 16 billion Bahraini dinars ($42.5 billion US dollars).

The new debt ceiling runs counter to the country's financial conditions as oil prices have recorded a significant increase since their drop in 2015, yet public finances have not benefited from this rise.

Global estimates indicate that the average oil price reached around $82 per barrel by the end of 2023, while the budget was based on a price of only $60 per barrel.

Instead of announcing a surplus in the budget for the half-yearly closure, the government stated that the actual financial deficit for the first six months of 2023 increased to 381 million dinars.

The government justified this increase in the deficit level by citing what it called a decline in oil prices in the global markets, a claim contradicted by the numbers.

The government continued borrowing to cover a non-existent deficit, leading to a rise in public debt to dangerous levels burdening the country's budget with its interest.

The interest accrued on public debt amounted to 767 million dinars for the year 2023 and 786 million dinars for the year 2024 according to budget estimates.

Although the royal decree raising the debt ceiling to 16 billion dinars was issued in September, the Ministry of Finance and Economy announced in March a debt figure exceeding the limit set by the decree.

In a statement in March 2023, the ministry confirmed that the total public debt reached approximately 16.7 billion dinars by December 2022, equivalent to 101 percent of the GDP in 2022.

The Sovereign Loan Risk Index issued by Bloomberg indicates that Bahrain's debt is among the riskiest in the Arab world, ranking third after Egypt and Tunisia.

The Bloomberg index measures a set of indicators related to sovereign debt including economic growth rate and GDP.

Among the 60 emerging markets covered by the index, Bahrain ranks 11th in terms of risk, while Kuwait ranks 60th as the safest sovereign debtor.

According to the International Monetary Fund, Bahrain's public debt-to-GDP ratio stands at 124.7%, the second highest among Arab countries after Sudan.

Arabic Version