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Subsidies cut for expats in Bahrain proposed

MANAMA, March 11, 2015

Costs could go up for expats and the private sector as Bahrain seeks to offset a projected shortfall in revenues, driven in large part by lower oil prices.

Finance Minister Shaikh Ahmed bin Mohammed Al Khalifa told the Gulf Daily News (GDN), our sister publication yesterday (March 10) that one proposal involved cutting subsidies for foreigners and companies, making them pay at least the cost price for government services.

He was speaking after he appeared in parliament to persuade MPs to retrospectively approve an increase in the amount of money the government is allowed to borrow.

MPs will vote next week on a Royal Decree issued before parliament was elected in November, which raised the government's borrowing cap from BD5 billion ($13.1 billion) to BD7 billion.

“None of the public's benefits will go away, but foreigners and companies will have to pay at least the cost price of services as one of the solutions to reduce costs,” Shaikh Ahmed told the GDN.

“We have different scenarios for the budget, which uses different oil barrel calculations.

“There is a general view on what we want, but again it will be left to MPs when we present them with the draft budget.”

During his appearance in parliament Shaikh Ahmed warned that failure to approve an increase in borrowing could directly affect the public.

“MPs' plans to cap it at BD5 billion as in the past budget, rather than BD7 billion as in the decree, are setting us back,” he said as he appeared in parliament.

“The cap will stop everything - monthly wages and programmes we have for the people - and we don't want to make the public scapegoats. It is not resolutions we are looking for, we want solutions.”

Shaikh Ahmed said the government had suggested different options to parliament, such as redirecting subsidies and reducing spending, to offset lower oil revenues.

“MPs want the oil price to be calculated at $60 per barrel when preparing the budget and for that borrowing is necessary, since we don't know what comes next regarding the oil market and whether there is a recovery,” he said.

Meanwhile, MP Ahmed Qarrata challenged the minister to come up with the 'perfect' budget that did not require borrowing. Qarrata offered to come up with his own finance proposals, which he dubbed 'The Qarrata Budget' - an offer that was accepted by Shaikh Ahmed.

“I am ready to see The Qarrata Budget and we in the government don't believe in monopolising wisdom.

“Help us with the budget. We are waiting for it to be presented to us and if it is as good as claimed, we will throw our plans, adopt it as ours and present it to parliament, rather than spend time preparing our own.

“But for now we will sit on the table and explain reasons why borrowing is necessary,” Shaikh Ahmed pointed out.

Parliament chairman Ahmed Al Mulla told the GDN he was given assurances that the Cabinet had finished revising the two-year budget, but did not know why it had not yet been presented to parliament.

He said he hoped it would be approved during the Cabinet's session next Monday. 'It will come to us by the end of next week, as promised, and it will not spend a lot of time with us (MPs) since what we want is already reflected in the four-year government action plan approved last month,' said Al Mulla.

Parliament's financial and economic affairs committee chairman MP Isa Al Kooheji told the GDN that Bahrain's borrowing currently stood at BD5.6bn, which equates to 45.3 per cent of GDP. - TradeArabia News Service
 




Tags: Bahrain | cost | Expat | cut | Subsidies |

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