On 2 July, the elected Council of Representatives approved the 2015-16 State Budget, by a majority of 22 the 40 MPs. On 5 July, the appointed Shura Council approved the Budget.

Budget approval process

According to the Constitution, the Budget should have been submitted to Parliament well before the end of the financial year. However, due to the timing of the November 2014 elections and the need for MPs to first approve the 2015-18 Government action Plan (debated throughout January and February), the Budget was initially delayed.

Further delays have been due to the difficulty of drafting the Budget in the context of sharp decreases in oil revenues which constitute the largest share of Government income. From an early stage MPs also sought reassurances that the final Budget would not compromise on promises concerning benefits and services for the public as agreed in the Action Plan.

The Budget was submitted to MPs during the first half of May and the Financial Committees of both houses of Parliament both formed a joint Committee to study to huge amount of documentation provided. Following consultation with other MPs, extensive revisions and additions were proposed by this Joint Committee. Some of these proposals were related to securing welfare payments and other benefits; while a range of proposals were also put forward for slashing public spending in other areas. In particular, several major projects judged to be non-essential were recommended for shelving.

MPs also put forward a number of proposals for boosting Government income and increasing the revenues flowing into the Budget. For example, it was agreed that income and profits from the Housing Bank would be included in the Budget.

Although the Government by no means agreed to all the proposals submitted, a series of significant amendments were made, leading to the two Financial Committees recommending to both houses of Parliament that they vote to approve the final Budget draft.

On 2 July, the elected Council of Representatives held a special session. The broad consensus was that although the Budget did not go far enough on welfare support to certain segments of society (benefits to the elderly and other segments of society with special needs was a central issue of concern), given the difficult economic circumstances, the Budget was the best that could be arrived at. A majority of 22 MPs voted in favour, while 12 voted against and two abstained (four were absent). It is notable that almost all the MPs considered to be in the Sunni Islamist segment of the Parliament voted against the Budget.

On 5 July a majority of Shura Council members also approved the proposals.

Debt ceiling

The issue of public borrowing has been an issue of major controversy associated with the Budget, so it is perhaps appropriate that during the same 2 July session a vote was held in which 18 MPs voted in favour of increasing the debt ceiling to BD 7bn, while seven MPs voted against.

This is particularly remarkable, because as recently as 24 March a large majority of 30 MPs rejected a similar measure, arguing strongly that there should be no additional borrowing.

This 180 degree swing in parliamentary thinking came as a result of the gradual realization of the impossibility of compiling an acceptable Budget without resorting to borrowing. 

At the end of the day, most MPs were willing to compromise on borrowing because they were not willing to compromise on welfare support and benefits to the general public. However, a small number of MPs, like Mohammed al-Ahmed and Mohammed al-Jowder remained resolutely opposed to increases in borrowing throughout this whole process. One MP, Ahmed Qaratah, went as far as submitting his own “zero deficit” Budget to the Finance Minister!

Below we look at the comments made by a number of MPs at the time of the Budget vote, both in favour of and against the Budget:

MPs voting in favour of the Budget

Head of the Parliamentary Finance Committee Isa al-Kooheji expressed his regret at the “rumours, gossip and numerous press statements aimed at whipping up people’s emotions” over the days before the Budget was passed. He stated that it was untrue that the Budget offered no benefits for the public; “I can confirm the preservation of the past benefits accorded to citizens and the inclusion of many new benefits, such as giving pensioners BD 360… We spent 1,500 hours in the Committee discussing the State Budget and the late submission of the draft Budget put pressure on the Committee”. 

Al-Kooheji also noted the reduction in state support for Gulf Air and the 15% reduction in the budgets for ministries, the additional funds for public services and the inclusion of the Housing Bank as part of the State Budget. Al-Kooheji warned MPs that failing to pass the Budget would benefit the Government, which would then be able to spend unchecked.

Deputy Chairman of the Finance Committee Nasir al-Qaseer warned that “Bahrain cannot bear a delay in approving the Budget” which he said would negatively affect the ability of the State to implement projects.

Majid al-Asfour warned of the dangers of not passing the Budget, including delays in projects and poor economic performance. Al-Asfour said: “War has reached our doors. Failing to approve the Budget will harm the security situation. Despite our reservations about many matters in this Budget, we must approve it”.

Deputy Parliament Chairman Ali al-Aradi described the Budget as “ambitious” following the inclusion of the proposals submitted by the Financial Committee. He said that the Budget took its lead from the Govt Action Plan.

Jalal al-Mahfoudh said that the Budget could be considered as a success for the Parliament, which had succeeded in securing the benefits previously promised to citizens, such as housing benefits and the counter-inflation payments. However, he called for implementation of many of the projects which had already been set out in previous Budgets. He praised the additional benefit payments for pensioners.

Chairman of the Legal Committee Majid al-Majid acknowledged the difficult financial climate in which the Budget had been passed, but said that “this is a positive Budget which provides significant funds”. He praised the inclusion of the Gulf funds in the Budget and called for better oversight of spending.

Ali al-Asoumi praised the results arrived at, given the steep fall in oil revenues and a situation “comparable with Greece – and yet the Government has not withdrawn the benefits accorded to citizens”.

Ali al-Atish criticized the procedure of notifying MPs about the debate, saying that he hadn’t had a chance to properly study the Budget. Al-Atish emphasized the importance of preserving support for the elderly and disabled and the need to address the issue of collapsing homes.

Adel Bin-Hamid said that he was unsatisfied with many aspects of the Budget, which he said “wasn’t up to expectations”. He said that he had hoped for a substantial number of modifications “but the Budget we’ve arrived at isn’t so bad”, given the sharp decrease in oil revenues.

Isa Turki questioned whether this was an austerity or a welfare Budget. He said that MPs approved of efforts to diversify revenue but called for greater transparency.

Jamal Buhassan acknowledged the challenging financial climate, but stressed the importance of preserving benefits allotted to citizens and praised the additional funding granted to senior citizens and the disabled.

Jamila al-Sammak stressed the level of expectations from the public, calling on the Government to now play its part in increasing revenue and decreasing dependence on oil. She urged greater support for those in society with special needs and stressed that the Government should not take any measures without consulting MPs.

Mohammed al-Maarifi, Ghazi Al Rahmah, Fatimah al-Asfour, Abdulhamid al-Najjar, Dhiyab al-Noaimi, Abbas al-Madhi, Khalifa al-Ghanim, Khalid al-Shaer, Hamad al-Dossary, and Parliament Chairman Ahmed al-Mulla also voted in favour.

MPs voting against the Budget

Finance Committee member Mohammed al-Ahmed stated that the Budget failed to implement the promises set out in the Govt Action Plan. He warned that the Govt’s promise to review retirement benefits could harm the elderly; criticized the Govt’s determination to go ahead with subsidy reform without consulting MPs; and raised concerns about new criteria in benefits for the disabled. Al-Ahmed also reiterated his criticism that the dollar on each barrel of oil accorded to Bapco masked the true prices of oil. He criticized the failure of sovereign wealth fund Mumtalakat’s profits to appear in the Budget.

Ahmed Qaratah, one of the most outspoken critics of the Budget, criticized the failure of the Budget to be “comprehensive” due to the non-inclusion of borrowing guarantees or a strategy to address the deficit.

Mohammed al-Jowder criticized the approach towards approving Budgets and said that the Government was trying to blame citizens for the rise in borrowing, “when really the Finance Ministry is responsible for this borrowing and we haven’t been told how the public debt is to be paid off”.

Abdulrahman Bumjaid stated that the Budget failed to achieve the promises set out in the Govt Action Plan and warned that in previous Budgets only 10% of what was promised had been achieved.

Mohammed Milad said that MPs were voting for an unconstitutional Budget, due to its delay in submission by two months.

Anas Buhindi said that if the Budget had been in accordance with the Government Action Plan then MPs would have been content to see a rise in borrowing. However, he said that this wasn’t the case and most things that had previously been agreed on aren’t to be implemented. Particularly, the benefits for the elderly and disabled wouldn’t include everyone.

Ibrahim al-Hammadi, Osama al-Khajah, Abdulhalim Murad, Ali Bufarsan, Ali al-Muqla and Nabil al-Balooshi also voted against.

Abstentions

Rua al-Haiki abstained from voting. She said that her abstinence was in protest at the decision to halt the debate after only four hours, not giving sufficient time for all questions and issued to be addressed. She said that her own questions had not been answered about the extent to which the Budget was in line with long-term economic strategy. She warned about the dangers of excessive borrowing, pointing out the current situation of Greece.

Jamal Dawoud abstained, stating that the Budget hadn’t achieved the demands of citizens, particularly the financial needs of the elderly.

Abdulrahman Bu-Ali, Abdullah Bin-Huwail, Muhsin al-Bakri and Mohammed al-Ammadi were all absent from the session.

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