Bahrain foreign reserves halve since 2014

Bahrain’s foreign reserves have more than halved since the end of 2014 as low oil prices slash the value of the country’s exports, the prospectus for the kingdom’s sovereign bond issue this week shows.
The central bank of Bahrain has not published its monthly monetary statistics bulletin since June 2015. It has not responded to requests for comment on why it halted publication.
That leaves bond prospectuses as a key source of data on the kingdom. The government has been increasing its debt issues to finance a budget deficit caused by cheap oil, and on Tuesday it sold $1 billion of seven-year Islamic bonds and $1 billion of 12-year conventional bonds.
Gross foreign reserves held by the central bank, including gold, shrank to $2.78 billion on June 30 this year from $3.39 billion at the end of last year and $6.06 billion in 2014, the Islamic bond prospectus showed.
At the end of 2014, reserves were worth 3.7 months of Bahrain’s imports, the prospectus said. That implies reserves have now dropped well below 90 days of import cover, a level traditionally considered by many economists to be at the bottom of a country’s comfort zone.
Bahrain’s current account balance, which includes trade in goods and services, fell into a $79 million deficit last year from a $1.52 billion surplus in 2014, the prospectus showed.
Despite the falling reserves, this week’s bond issues attracted a healthy combined order book of over $7 billion, and the Bahraini dinar, which is pegged to the US dollar, has come under only modest pressure in the forward market during the past few months.

Source: Arab News