Bahrain’s parliament has approved the doubling of value-added tax to 10%, a member of parliament said, a reform that is part of plans to fix the Gulf state’s heavily indebted finances. Bahrain’s public debt climbed to 133% of gross domestic product last year from 102% in 2019, the International Monetary Fund has said.

Parliament recognized the measure was “a critical pillar of the kingdom’s fiscal balance programme”, Ahmed Al Salloom, member of parliament and chairman of the Financial and Economic Affairs Committee, said in a statement on Wednesday.

“The successful approval of the VAT increase by parliament is a critical milestone within our economic recovery plans and our aim of achieving a balanced budget by 2024,” the ministry of finance said. The VAT increase, expected to start next year, could contribute receipts of about 3% of the gross domestic product in the next few years, up from about 1.7% this year, rating agency S&P Global Ratings has estimated.

Source Credit: Reuters