The kingdom of Bahrain, renowned for its open markets and one of the most vibrant financial industries in the region, has faced economic headwinds in recent years. Lower oil prices have affected the many corporates that have chosen Manama as a base for their regional operations, and a stubborn fiscal deficit has resulted in a record-high level of public debt. The government has responded with a process of financial adjustment that is slowly narrowing the fiscal gap, but its longer-term solution to the economic challenges it faces rests on wider reform initiatives that aim to build on the kingdom’s already relatively diversified economy.

THE BIG PICTURE: Bahrain’s economy is one of the smaller markets in the GCC, with a real GDP of BD11.9bn ($31.6bn) in 2016, according to the IMF, which then grew by an estimated 3.5% in 2017, per the fourth quarter 2017 publication by the Bahrain Economic Development Board (EDB). However, its liberal legislative and regulatory framework, talented human capital, strategic location and conducive business environment have established it as an important component of the regional economy.

Since the 1970s the country has been a leading financial centre. As a gateway to neighbouring markets, it has succeeded in attracting banks, insurance companies and investment firms from around the world: as of September 2017 Manama was home to 398 financial institutions. For decades officials have supported the financial sector as a means to reduce its reliance on oil as the chief driver of economic growth, and by 2016 the financial sector’s contribution to GDP exceeded 17% of the total, according to the Central Bank of Bahrain (CBB). In addition to finance, Bahrain has diversified its economy into a number of other non-oil activities, including aviation, communications, industry and real estate. One of the most significant companies borne of the increasingly wide range of activities is Alba – one of the largest aluminium smelters in the world, generally recognised for its technological advancement and high-quality production.

The non-oil sector is expected to drive growth over the coming years, with the EDB forecasting activities unrelated to hydrocarbons extraction to expand by 3.9% in 2018, compared to 0% for the oil and gas sector. However, despite its success at diversifying the local economy, Bahrain’s exposure to and interconnectivity with regional markets makes it vulnerable to external factors, such as the decline in oil prices that began in late 2014. The kingdom’s fiscal deficit reached nearly 18% of GDP in 2016, according to the IMF, and as the country increasingly turned to the international markets to bridge its fiscal shortfall, government debt rose to 82% of GDP. Bahrain’s international reserves – which are modest compared to most of its larger GCC neighbours – declined during 2016, and slowing economic activity saw a reduction in bank deposits and private sector credit growth.

Nevertheless, Bahrain’s economy had an encouraging start to 2017, with the non-oil sector showing a particularly high degree of resilience. Non-oil GDP expanded by 4.8% year-on-year (y-o-y) during the first three quarters of 2017, according to the EDB. This mitigated a 1.3% drop in the oil sector to give the economy a 3.6% overall GDP growth rate. The bulk of non-oil expansion proved to be driven by the private sector, with government services expanding by less than 1% over the period. Furthermore, according to the IMF’s Article IV Consultation with Bahrain in June 2017, the fiscal deficit was expected to contract to 12.2% of GDP for the year.

FISCAL MATTERS: Bahrain is unusual among GCC countries in that it publishes its budget for two consecutive years, a practise which gives private sector investors useful insight into government expenditure plans over the medium term. In June 2017 the Cabinet approved a draft budget for 2017 and 2018 that suggests that narrowing the fiscal gap will be a slow-moving process. Budget data for 2017 suggested that government revenue will reach $5.8bn, while state expenditure will stand at around $9.2bn – resulting in a projected deficit of $3.4bn. Representing a fiscal deficit of less than 11% of GDP, if actual spending and revenue prove to have met the government’s forecast, these figures represent a considerable improvement on the $4bn actual budget deficit of 2016. Nevertheless, Bahrain’s deficit falls outside the 3% of GDP target established by the Gulf Monetary Union.

CUTTING COSTS: Fiscal adjustment, therefore, has become a central priority for authorities, a process that involves both reducing public spending and boosting revenue. One of the government’s first targets for overhaul was the system that for decades has provided Bahrainis with a wide range of subsidised items, such as meat, gas, petrol, diesel, electricity and water. In 2015 these subsidies accounted for 21.1% of total public expenditure.

For some items this effort has been ongoing for years: industrial tariffs for gas in the country were increased by 50% in January 2012, which resulted in an annual estimated saving of 1.4% of GDP, according to the IMF. More recently, however, the decline in oil prices has compelled the government to extend its subsidy reduction to some politically sensitive areas. In late 2015 Bahrain lifted subsidies on beef and chicken, effectively doubling their market rate, while in January 2016 it fully removed support for diesel, kerosene and petrol – a move that resulted in a 60% rise in prices at the pump.

Still, the largest potential savings lie in the utilities subsidy system: government support for electricity and water was the single-biggest expenditure on the subsidy list in the 2015/16 budget. To date authorities have proceeded cautiously with its reform of this costly policy. In mid-2015 a joint government-Parliament committee formed to discuss the question of cuts agreed that state spending on electricity and water subsidies for citizens’ homes would remain in place for 2015 and 2016. The government has instead focused its utilities subsidy reform effort on businesses, expatriate residents and Bahrainis who own more than one home. In early 2016 officials approved subsidy cuts that will eventually see power and water prices double, saving the government an estimated $1.1bn.

The limited application of utilities subsidy reductions and the expansion of public debt to a level higher than 80% of GDP has prompted the IMF to call for further spending reform. In an April 2017 statement the organisation pointed to public sector salaries as a potential target for reductions (see analysis). “The wage bill, which is nearly 12% of GDP and among the highest in the GCC, can be reduced in the near term by streamlining allowances and freezing nominal wages,” it said. As with utilities, however, the reform of public sector remuneration carries a political cost, as the experience of Saudi Arabia has demonstrated. In 2016 the country cut ministers’ salaries by 20% and removed or limited a range of bonuses enjoyed by public sector employees, including housing, car allowances and overtime pay. The decision was reversed in April 2017.

BOOSTING REVENUE: In addition to reducing costs, Bahrain has taken steps to increase revenue as a means of balancing the national accounts. Its agency in this regard is limited, however. The country’s liberal economic model has historically been characterised by low taxation, a factor that has enabled it to nurture a strong financial services sector and attract investment to an array of other industries. The kingdom’s tax base, therefore, is a narrow one: there are no taxes on personal income nor corporate income, except for oil companies, and there are no wealth, capital gains, death or inheritance levies.

To date, the government’s revenue-boosting measures have been largely limited to increases in fees charged for public services, such as the introduction of a health care charge of BD72 ($191) per year on foreign residents’ visas, a 10% levy on tourism services, a 12% sales tax on petrol and a stamp duty on real estate. However, the impact of these changes do little to alter Bahrain’s taxation profile, in which oil revenue dominates. According to the IMF, the non-oil tax revenue of Bahrain stood at just 0.6% of GDP in 2014 – a low figure even by GCC standards, where non-oil taxes have historically played a very small part in governments’ fiscal operations.

While it is unlikely that Bahrain will place itself at a competitive disadvantage to other GCC states by introducing a more widespread corporate tax or a tax on personal income, a boost to revenue is scheduled to come from the introduction of value-added tax (VAT). Ministers across the GCC agreed upon the long-anticipated VAT framework in early 2016, and each state is free to implement it from January 1, 2018. According to a 2017 statement by Bahrain’s minister of information affairs, the net tax will be applied to goods and services at 5%, and the exemption list will include basic food commodities, medicine and medical supplies. In early 2018 it was announced that VAT would be implemented by the end of that year. GCC member states have been granted some flexibility as to its application in some instances, with the VAT Framework Treaty outlining the areas in which individual jurisdictions must apply a “zero-rate” or make exemptions, and other areas which the treaty defines as “may zero-rate”. The latter includes certain food items, supply of transportation for commercial purposes, and the oil and oil derivatives industry. States are also free to zero-rate or exempt any of four economic sectors: education, health care, real estate and local transport. Those areas of the economy to which VAT will not apply will be revealed in 2018.

Given the technical challenges associated with the introduction of a new tax, the IMF predicted in February 2018 that implementation would take place in 2019. Revenue derived from VAT was not included in the government’s 2018 budget, and while income generation will vary according to the success of the application and the length of the finalised zero-rate and exemption lists, the IMF estimated that the introduction of VAT in Bahrain will bring $568m to Ministry of Finance coffers annually, assuming a 5% rate, which was equal to about 1.6% of GDP in 2015.

BRIDGING THE GAP: Fiscal reform is a long-term undertaking. The immediate concern of the government, therefore, is to secure sufficient funds to meet its spending obligations – a challenging proposition given the kingdom’s relatively small reserves. Bahrain’s net asset international investment position, which stood at nearly 75% of GDP in 2016, represents a modest external buffer, and one which is likely to be depleted over the medium term as external liabilities grow at a faster rate than the country’s assets, according to Moody’s.

In October 2017 the kingdom’s sovereign wealth fund, Mumtalakat, announced that it would distribute BD20m ($53m) of its profits to the national budget for two years. While this is a helpful intervention, it is not a long-term one. Mumtalakat – the 36th-largest fund in the world with assets of around $10.6bn, according to the Sovereign Wealth Fund Institute – does not have the capacity to completely bridge the fiscal deficit, nor is that its purpose. Neither can Bahrain rely on foreign currency reserves to fund its future spending commitments: by May 2017 the country’s net foreign assets had decreased by 71% from their November 2014 peak of BD2.24bn ($5.9bn), to BD645.2m ($1.7bn).

Thus, borrowing from global markets is the simplest route to finance the government, and in this respect it is joining a regional trend. Bond and sukuk (Islamic bond) issuances by GCC governments and corporates ran at relatively modest levels until 2014, averaging $23bn annually, or 1.5% of GDP, according to the Financial Times. However, the need of regional governments to raise funds to offset the effects of lower oil prices on revenue has led to a rapid expansion in sovereign issuance. In 2015 and 2016 the annual average of bond and sukuk issuance in the region more than doubled, to $57bn, with sovereigns accounting for the bulk of the rise. According to a January 2018 study by First Abu Dhabi Bank, the value of total outstanding bonds and sukuk across the GCC was approximately $316bn in 2017, with Bahrain accounting for 6% at the end of the year.

DEBT ENVIRONMENT: Bahrain has a history of successful approaches to the debt market, but rating downgrades in 2017 may make securing funds slightly more difficult going forward. In the first half of the year the sovereign rating of the kingdom was lowered to non-investment grade with a negative outlook by Moody’s (“B1”), S&P (“BB-”) and Fitch (“BB+”) – a development that threatens to render bond and sukuk issuance prohibitively costly.

Some observers, however, believe the models used by global ratings agencies in their assessments of Bahrain fail to take into account the tacit support the kingdom receives from its regional allies, and in particular the political ties with Saudi Arabia. The Islamic International Rating Agency, a Manama-based institution established in 2005 that specialises in markets where sharia-compliant finance plays a significant role, has taken a different view of Bahrain’s ability to meet its debt obligations: in 2016 it granted Bahrain a sovereign long-term rating of “BBB”, denoting adequate credit quality, and a short-term rating of “A3”, signifying satisfactory liquidity and an expectation of timely payment.

As with other countries in the region, spreads on Bahrain’s sovereign debt widened during 2017 as markets reacted to the new economic backdrop. Market uncertainty rose in 2017 with the diplomatic stand-off between Qatar and other GCC states, bringing interruptions to transport and trade. These factors combined to make Bahrain’s September 2017 sovereign debt offering one of the most keenly observed in years. The kingdom widely promoted its first issuance since October 2016, holding investor roadshows in the UK, the US, the Middle East and Asia. The multi-tranche transaction was worth a combined $3bn – the largest in the country’s history – and included a 7.5-year $850m benchmark sukuk, which in initial price discussions in mid-September 2017 was established in the 5.625% area. Despite a reported block on bids by Qatari investors, strong demand from other investors drove books to over $15bn, an unequivocal demonstration of continued appetite for Bahraini government debt.

FACTORS AT PLAY: The divergence between strong investor appetite and the kingdom’s lowered credit ratings is explained by the widespread perception that Bahrain will continue to be supported by regional peers such as Saudi Arabia, the UAE and Kuwait. The kingdom is a beneficiary of the GCC Development Fund, established by its allies, which is enabling Bahrain to implement the programmes outlined in its Economic Vision 2030 strategy. As of June 2017 some $6.73bn had been allocated from the fund to domestic projects and $1.16bn disbursed; these receipts are not recorded as budget line items.

While Bahrain’s issuances are still proving attractive to investors, internal policies may act as a brake on its debt schedule in the near future: after the September 2017 bond issuance, the kingdom was left $7bn short of its debt ceiling of $34.2bn, which represents 100% of estimated GDP for 2017. Outstanding government debt stood at $955m in 2016 and was projected to expand to $1.2bn in 2017. According to Moody’s, interest payments already accounted for around 21% of budgeted revenue in 2017, up from 13% in 2015. The increasing debt burden has raised concerns regarding the future affordability of additional issuances, and therefore Bahrain’s long-term programme of economic reform – which includes further diversification efforts as well as the implementation of new taxes and the reduction of subsidies – has come under increasing scrutiny over recent months.

DIVERSIFICATION PUSH: The long-term solution to Bahrain’s fiscal challenge is a diversified, taxable economy. A number of state bodies cooperate in the national effort to broaden the economic base, but perhaps the most prominent is the EDB, a public agency that has been tasked with attracting inward investment and improving the general investment climate of the country. Chaired by Sheikh Salman bin Hamad Al Khalifa, the crown prince, the EDB includes representatives of both the government and private sector. Since its inception in 2000 the board has addressed concerns ranging from the provision of social housing to opening Bahrain to international ratings. In 2005 it established the government’s investment arm, Mumtalakat, which over the past decade has developed and managed a portfolio of non-oil and gas-related assets. Mumtalakat has been instrumental in a number of significant economic developments, such as its BD475m ($1.3bn) funding and restructuring of national flag carrier Gulf Air between 2006 and 2012, which reduced the airline’s losses by 86%. It has also been central to the success of Alba, overseeing an efficiency programme since 2014, as well as the launch of its Line 6 expansion, due to be inaugurated in 2019.

More recently, Mumtalakat has formed partnerships with a number of global institutions that, taken together, will generate more than 1000 new jobs in Bahrain. These include an agreement with local industrial projects developer and investor Cayan Holdings and Mueller Industries of the US to build the region’s first copper tube manufacturing factory. Other strategic investments in real estate and aviation continue to drive economic growth and diversity in the kingdom’s markets.

Additional state institutions support the diversification push, including: Tamkeen, the national labour fund responsible for enhancing the skills of Bahraini nationals; the Bahrain Development Bank, which has played a crucial role in helping to develop small and medium-sized enterprises (see analysis); and the CBB, which, through its prudent oversight of the financial services sector, has been a major player in building Bahrain’s status as a financial hub.

FINTECH: Bahrain’s vibrant financial sector is the source of one of the most interesting diversification efforts of 2017. The government intends to leverage the kingdom’s strong financial services reputation to establish Bahrain as a hub for financial technology (fintech) development. Globally, fintech is one of the fastest-growing financial segments, collecting over $22bn in investment in 2015, according to the CBB. In June 2017 Bahrain launched a new “regulatory sandbox”, a concept which allows for limited-scale testing of new fintech products for a fixed period (see ICT chapter). The new facility is offered to firms with existing solutions that have already been tested in a lab environment, as well as ideas that have yet to be developed and tested. The sandbox is open to both domestic and foreign companies, which the central bank predicts will include financial firms, technology and telecoms companies, professional services businesses, as well as any other type of applicant deemed acceptable by the regulator. The framework allows a nine-month period for testing of new products, which may be extended by another three months. Sandbox candidates can use volunteer customers or their own staff for the sample pool, but the decision regarding the total amount of test subjects remains in the hands of the CBB and will be determined on a case-by-case basis.

As with other sandbox initiatives, the CBB aims to ensure that only technologies that will make a significant and positive contribution to the financial services sector are included in the programme. Consequently, successful candidates will offer products for trial which are “truly innovative or significantly different from existing offerings.” In establishing itself as one of the first countries in the region to adopt the concept, Bahrain is aligning itself with some of the world’s most progressive financial jurisdictions (see Banking chapter).

The sandbox aligns with another development that adds momentum to Bahrain’s push to establish itself as a technological centre. In September 2017 Amazon Web Services (AWS) – the $10bn computing subsidiary of e-commerce giant Amazon – announced plans to construct at least three data centres in Bahrain by 2019. The new infrastructure will, among other things, meet the data needs of a rapidly expanding GCC e-commerce arena, which global management consultancy A T Kearney anticipates will be worth around $20bn by 2020. The Bahrain facilities are AWS’ first venture in the region, and the employment opportunities and knowledge transfer that come with them will provide a useful fillip to the domestic ICT industry.

TARGETED SECTORS: The financial services sector is just one of five areas identified by the EDB as a driver of future economic expansion. Bahrain’s status as a gateway to the rest of the region makes the logistics sector another key target for development. The kingdom’s Khalifa Bin Salman Port is the most efficient in the region, according to the EDB, with a container clearance time of less than three hours and a truck turnaround time of under one hour. Companies wishing to establish distribution centres in Bahrain benefit from a liberalised regulatory environment and access to a direct entry point into the Eastern Province of Saudi Arabia via the King Fahd Causeway. Bahrain’s most important logistics processing zones – which include Bahrain International Airport, Khalifa Bin Salman Port, Bahrain International Investment Park and Bahrain Logistics Zone – are all located within easy reach of this strategically important link, and a number of large logistics firms such as TNT, UPS, DHL, Aramex, Agility, FedEx and Kuehne+Nagel, are already present in the country. Bahrain’s physical connection with the biggest economy in the GCC will soon be enhanced by an additional road and rail link: the King Hamad Causeway is expected to cost between $4bn and $5bn, and will be developed using the public-private partnership model.

Given the relatively small size of the domestic economy, Bahrain’s logistical strength is fundamental to the expansion of the EDB’s third targeted sector: manufacturing. Some large manufacturers are already present in the market, including the UK’s Reckit Benckiser, Germany’s BASF and Mondelez International of the US. Those located in specialised areas such as Bahrain International Investment Park benefit from duty-free access to all GCC markets, giving them a 5% margin over other free zones in the Gulf, while incentives available throughout the kingdom include 100% foreign ownership and zero corporate tax (see Industry chapter).

The ICT sector is yet another strong growth prospect, says the EDB. The kingdom’s main competitive advantages in the field are its liberalised telecoms market and extensive fibre-optic cable links to the rest of the region. Robust intellectual property laws, administered by the Bahrain Industrial Property Office, are also an important factor to an industry that is based on innovation. ICT companies that have established themselves in Manama include regional giants Zain and Viva, as well as global players such as Hewlett Packard and Microsoft of the US, Tata Consultancy Services of India and China’s Huawei.

Lastly, Bahrain’s large retail sector, sporting attractions that include a Formula 1 racetrack, two UNESCO World Heritage sites and a liberal social environment mean that the tourism industry has significant expansion potential. The Bahrain Tourism and Exhibition Authority is overseeing various initiatives aimed at broadening the range of attractions on offer in the kingdom. In December 2017 it announced the launch of the first tourist pearl diving trip from Ras Raya Port, part of a wider strategy to revive the country’s pearl industry.

FOREIGN INTEREST: Realising the potential of these sectors will require domestic as well as foreign investment. The decision by AWS to use Bahrain as its regional cloud computing base illustrates the kingdom’s continued attractiveness as a destination for foreign direct investment (FDI). In 2017 Bahrain attracted record investment of $732m from 71 companies, according to the EDB, compared to $281m from 40 firms in 2016. The investments originated from markets all over the world, with $498m sourced by North America, $18m by Europe, $183m coming from the MENA region and $33m from Asia. The primary recipient sectors were ICT, manufacturing, transport and logistics, leisure and tourism, financial services, professional services and start-ups.

Much of Bahrain’s ability to attract FDI stems from its well-developed logistics infrastructure and central Gulf location – attributes which the kingdom has capitalised on with the offering of specialised zones. For example, one of the key FDI deals to materialise in 2018 is the operation of Mondelez International’s $110m, 250,000-sq-metre biscuit plant – the firm’s second factory in the Bahrain International Investment Park. The 247-ha business park is designed to attract export-orientated companies, enhancing the kingdom’s liberal investment environment with serviced industrial land at competitive rates, renewable 25-year leases, no recruitment restrictions for the first five years of operation and services of a professional management team.

In further increasing FDI, much of future investment is likely to be derived from within the GCC, a source the government sought to tap in 2017 with a ruling that allows citizens of GCC countries residing in the kingdom to obtain a Bahraini ID and the financial access associated with it (see analysis).

BUSINESS CLIMATE: While the slow pace of privatisation and a relatively rigid labour market continue to act as barriers to FDI, the kingdom has made significant progress in recent years to improve its business climate. One of the most notable advances came in 2015 when the government amended the Commercial Companies Act to remove the minimum capital contribution requirement – an important liberalisation of the investment framework.

The country also scores fairly well in the ease of doing business index of the annual “Doing Business” report by the World Bank. While Bahrain declined three places on the previous year to score 66th globally in the 2018 survey, it maintained its positions as second in the MENA region. In the 2017 report the kingdom showed strong progress with reducing minimum capital requirements, introducing an e-portal for business registration, improving access to credit information, and improving logistics services through automation and enhanced procedures at the King Fahd Causeway. However, in the 2018 iteration Bahrain got docked in the category of paying taxes. The country “made paying taxes more complicated by introducing a new health care contribution borne by the employer”, the report stated.

TRADE: By nurturing developing sectors and increasing FDI, Bahrain will do much to diversify its trading activity, which has historically been characterised by consistent trade surpluses from lucrative oil exports. However, the oil price decline has altered the dynamic. According to the CBB, in 2013 oil exports accounted for around 60% of total exports from the kingdom, but lower prices reduced their share in the export basket to 47% by 2016. The era of reliable trade surpluses has also come to an end due to the disruption in the oil market, with the kingdom posting a deficit in 2016 for the first time in years. The shift highlighted the need to generate a wider array of exported products, a task which the government undertakes armed with some important advantages: the entire country is effectively a free zone and commercial companies operating from dedicated industrial areas enjoy duty-free access to all GCC markets, unlike those located in similar specialised zones elsewhere in the Gulf.

Currently, non-oil exports from Bahrain are dominated by aluminium – the global price of which has also declined – followed by steel and light manufacturing products. More than half of exports are destined for other GCC states, with Saudi Arabia being the single-largest recipient, claiming around 35% of Bahrain’s non-oil exports. In 2017 the value of non-oil exports exhibited a positive trend over 2016, with such exports of national origin reaching $3.81bn during the first eight months of the year, according to the EDB’s fourth quarter 2017 publication. This was a 16.9% y-o-y increase.

On the other side of the ledger, major non-oil imports include iron ore and concentrates, machinery and automobiles, electrical appliances, food and other consumer products. China is Bahrain’s main import partner, while other important sources include Brazil, the US and neighbouring GCC states.

OUTLOOK: While economic forecasts vary, most agree on modest GDP growth and a gradual narrowing of the fiscal deficit over the medium term. The IMF expects the final data for 2017 to show real GDP growth of 2.48% for the year, and projects that ongoing fiscal consolidation and weaker investor sentiment will see the rate of economic expansion slowing to 1.74% in 2018. The EDB’s most recent forecast, however, foresees a GDP expansion of 3.3% in 2018, followed by 2.9% in 2019.

Bahrain’s ability to maintain its project plans is central to this forecast growth. According to the EDB, the overall infrastructure project pipeline in the kingdom stood at $81.9bn in June 2017, led by the $3bn Alba expansion project, a $1.1bn airport expansion and a $355m Banagas gas plant upgrade. The new King Hamad Causeway, for which expressions of interest were solicited in June 2017, will soon be added to the docket. A number of government initiatives also aim to boost economic expansion and infrastructure development. These include the National Renewable Energy Action Plan, which targets 5% of energy coming from renewable sources by 2025; a broadband network plan to connect all businesses and 95% of residences with fibre-optic cable; and a Real Estate Organisational Law that requires all new projects to pay a fee of BD12 ($31.82) per sq metre towards infrastructure development.

The modest recovery of oil prices in 2017, combined with the government’s trimming of its expenditure, means that the fiscal deficit is forecast to shrink from the 16% of GDP seen in 2016 to an actual final figure of 12.2% in 2017. The implementation of VAT is expected to further reduce the fiscal deficit over the medium term, although some of the revenue gains from the new tax will be offset by rising interest payments on the kingdom’s sizeable government debt. Bahrain’s budget projections foresee expenditure of $9.2bn and revenue of $6.2bn in 2018, resulting in a deficit of $3bn. Ratings agency Fitch anticipates that the government deficit for 2018 will narrow to 10.2% of GDP.

Rising government debt is likely to remain a concern for the coming years. Moody’s anticipates that the kingdom’s debt-to-GDP ratio will cross 100% by 2020, an event that is likely to result in a deterioration in Bahrain’s ability to fund its ambitious development programme. In September 2017 the IMF welcomed the country’s establishment of a Debt Management Office to oversee all government and quasi-government borrowing activity, and called for the formulation of a comprehensive fiscal financing and debt management strategy to mitigate risks.