In recent days both houses of Parliament have passed the state budget for the 2019 / 2020 financial years. Head of the Shura Council Finance Committee Khalid al-Musqati said that the swiftness and smooth-passing of the Budget was in itself a huge achievement. The emphasis of parliamentarians throughout this process has been on ensuring that citizens’ benefits are protected; maximizing spending for departments like Education, Health and Housing; while ensuring that government departments maximize their income in order to minimize Bahrain’s debt obligations.
Indeed, the entire process appears to have gone forward in a very constructive and positive manner, compared to previous years, despite deputies raising dozens of queries and proposals. Shura MP on the Finance Committee, Darweesh al-Manai said that the passing of the Budget was the “fruit of the cooperation between representatives of both the executive and legislative branches of government, particularly in the light of joint efforts to achieve financial equilibrium and implement the Government Action Plan, while protecting citizens benefits”.
Bahrain was recently commended by the International Monetary Fund for its successes in bringing financial commitments under control. IMF executive directors “commended authorities for their efforts to address fiscal and external vulnerabilities.” These efforts include far-reaching subsidy reforms, the introduction of VAT, a voluntary retirement plan for state workers, and a broad range of other efficiency measures. IMF’s directors “encouraged further structural reforms to support diversification and private sector-led inclusive growth.”
Bahrain’s Government estimates that its fiscal programme as of 2018 had cut the budget deficit by 35%. Bahrain’s budget deficit in 2018 fell to 11.7% of GDP, from 14.2% in 2017, according to IMF estimates. In the wake of this progress Bahrain is planning to return to international bond markets in the second half of 2019, making the process of managing Bahrain’s debt cheaper and smoother.
Bahrain’s financial position has been further strengthened by a $10bn financial package from GCC states to support infrastructural investment and improve the Kingdom’s long-term financial standing. This financial support has allowed the government to fast-track massive infrastructure investment projects worth over $32bhn, including $10bn from government holding companies and $15bn from private investors. A further positive prospect for the Kingdom’s finances was the 2018 announcement of the discovery of vast new reserves of oil, which promises to improve Bahrain’s financial position significantly as these become available for exploitation.