Bahrain has announced austerity measures in line with IMF recent recommendations, in a bid to return to international bond market and to finance its expanding budget deficit of 15% of the country’s GDP, reported Reuters. IMF has recommended that Bahrain imitates other Gulf Arab oil producers by introducing a value-added tax (VAT), cutting spending on social transfers, and freezing public-sector wages.

Bahrain’s Finance Minister, Sheikh Ahmed bin Mohamed Al-Khalifa, said that the recommendations echo Bahrain’s Government’s Action Plan deploying measures such as removing subsidies on meat and reducing subsidies on fuel products, wrote the Bahrain News Agency. In addition, Bahrain is committed to diversifying its economy by boosting non-oil revenues, creating jobs, and pushing up its GDP. The government was spending $32b on strategic projects, out of which $10b is earmarked for development projects for the next ten years and supported by the GCC Development Fund.

The IMF is helping several Gulf States restructure their tax systems to minimize budgetary pressures brought on by low oil prices.