Measures taken by Bahrain to cushion the repercussions of the 2008 global fiscal distress nearly doubled its public debt but its ratio to GDP remains far below the 60 per cent ceiling required by the Gulf monetary union, a Kuwait bank has said. From around 1,348 million (Dh23,400 million) at the end of 2009, the Gulf country’s public debt surged to BD2,747 million (Dh26,460 million) at the end of the first half of 2011, Global Investment House (GIH) said in an economic review of the Island nation. The report said the debt in 2011 was nearly 12.5 per cent higher than its level at the end of 2010. “The surge in debt can be attributed to measures taken by the government to counter the effects of global financial crisis.” It noted that the composition of total debt in Bahrain’s financial profile has seen a shift from Islamic instruments like Islamic Leasing Securities and Al Salam Islamic Securities to conventional instruments like development bonds and treasury bills. The increasing proportion of Islamic instruments in its public debt profile since the end of 2009 was in line with the government’s aim to make the Kingdom an Islamic financial hub, GIH said. However, the Bahrain government’s reliance on Islamic instruments has been declining since the end of 2009, it added. The report showed the share of Islamic instruments to public debt has dropped drastically from 85.4 per cent in 2007 to 68.7 per cent in the end of 2009 and to 40.5 per cent at the end of the first half of 2011. “The total public debt of Bahrain as a proportion of GDP increased substantially from 8.5 per cent in 2008 to 27.6 per cent at the end of first half of 2011. Much of the debt is the result of higher state spending to stimulate the economy and strengthen the country’s infrastructure, a move seen as vital if Bahrain is to develop itself as a regional financial and logistics centre,” the report said. “However, despite the increase, the debt level is significantly lower than 60.0 per cent requirement of the Gulf monetary union which was launched in early 2010.” Bahrain is one of four Gulf countries who signed an agreement to set up a landmark monetary union which capped previous merger efforts including the customs union and the common Gulf market. The other signatories are Saudi Arabia, Kuwait and Qatar.