Manama, Mar.2 (BNA): The Kingdom of Bahrain’s Ministry of Finance and National Economy today discussed the 2021-22 State Budget in the national parliament, gaining approval of the Council of Representatives.
Upon submission to parliament, the Ministry of Finance and National Economy highlighted the government’s unprecedented efforts to mitigate the effects of lower oil prices and the ongoing impact of the COVID-19 pandemic.
Cross-government success in tightly controlling recurrent government expenditure (excluding emergency spend) was emphasised, which was BHD 63Mn under budget in 2020.
The Ministry also emphasised the government’s unwavering commitment to the Fiscal Balance Program’s targets. Past reforms implemented under the Program include a government-wide spending review, the creation of spending efficiency taskforces, the roll-out of a voluntary retirement scheme for public sector workers and the implementation of VAT.
The Ministry underlined that strong economic growth projections – 5% for 2021 – demonstrated Bahrain’s underlying competitiveness and strong economic fundamentals, which will provide the foundations for fiscal recovery in the near- and medium-terms.
The State Budget’s fiscal results and projections for 2021 – 2022 show the Ministry expects total revenues to reach BHD 2,406Mn in 2021 and BHD 2,457Mn in 2022, while government expenditure is expected to total BHD 3,614Mn in 2021 and BHD 3,569Mn in 2022, meaning the overall deficit is expected to be BHD 1,208Mn in 2021 reducing to BHD 1,112Mn in 2022.
Announcing the State Budget, the Ministry outlined the new measures taken which include:
• The creation of a revenue taskforce to support the government’s drive to increase non-oil revenues and encourage partnerships with the private sector in the provision of government services.
• The doubling of Mumtalakat’s contribution to Government revenues.
• Increasing the size of the projects budget.
The Ministry noted that these measures complement the significant actions taken by the government since the onset of the COVID-19 pandemic.
These have included the Central Bank’s loan deferrals option and reduced reserve ratio requirements to ensure sufficient liquidity for banks; the doubling of the Liquidity Support Fund, the launch of Tamkeen’s Business Continuity Support Program to support Bahraini enterprises; and salary support to Bahrainis working in private sector companies, which was fully funded from the government’s unemployment fund.
The Kingdom’s efforts were praised by the International Monetary Fund (IMF) following the conclusion of its most recent Article IV mission to Bahrain, in February 2021, noting the Kingdom’s “swift and well-coordinated policy responses have helped limit the spread of the virus, deliver rapid and widespread access to vaccinations, and target income and liquidity support to those most in need.”
And that “despite considerable challenges, the authorities remain committed to achieving the key objectives of the Fiscal Balance Program, including gradually rebuilding policy buffers and reversing the rise in public debt.”
During the parliamentary debate, Bahrain’s Minister of Finance and National Economy, H.E. Shaikh Salman bin Khalifa Al Khalifa, said:
“This budget makes clear Bahrain’s continued commitment to the Fiscal Balance Program, despite the unprecedented challenges of COVID-19, with core Government expenditure remaining under tight control. New measures contained within the announcement, including establishing a revenue taskforce, will further drive the Kingdom’s economic diversification, and grow the role of the private sector in government service delivery.”
“Our national response to the COVID-19 pandemic has been impressive, and with vaccinations continuing to roll out at pace, we are well placed to take early advantage of the global economic recovery. Bahrain’s growth projections for the coming year are positive and with the creativity and innovation of Bahrainis underpinning our strong economic recovery, we have good reason to be optimistic.”