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Bahrain’s subsidies plan set for review

MANAMA, June 3, 2015

Bahrain’s government will present its blueprint for scrapping and redirecting subsidies to the National Assembly next week.

Finance Minister Shaikh Ahmed bin Mohammed Al Khalifa said parliament and Shura Council members would be given limited time to review the government's plans, reported the Gulf Daily News (GDN), our sister publication.

He spoke to MPs during yesterday's parliament session after they voted to halt government plans to axe meat subsidies, which would come into effect from August 1 along with increasing fees for unspecified government services currently subsidised.

The second phase of cuts would see the scrapping of power and water subsidies, which are expected to cost the government BD325.5 million ($857.3 million) this year and BD315.7 million next year, followed by the removal of oil and gas subsidies.

"We will present the entire plan on axing and redirecting subsidies in our meeting with MPs and Shura Council members early next week - it will happen and we believe in negotiations with you," Shaikh Ahmed told MPs.

"A decision has to be taken. We don't wants debates that drag on - there is a gap between revenue and spending that we have to deal with immediately."

Shaikh Ahmed said redirecting subsidies was already included in the government's four-year action plan, which parliament approved earlier this year.

However, he admitted the challenge was implementing it.

"Every time we presented parliament with a budget there has been debate and demands, we accept them despite concerns, but oil prices are dropping and for that we need some tough decisions to be made to protect our economy," he added.

"Wise decisions helped us overcome the global financial crisis in 2008 and the unrest in 2011 as we worked hand in hand with parliament.

"Redirecting subsidies will make the difference if we are to continue strong."

However, MPs, including Abdulrahman Buali, said the budget for this year and the next could support subsidies if "unnecessary" and "luxurious" spending was removed.

The GDN reported that legislators asked Bahrain's government on Sunday to redraw the national budget in an attempt to reduce the deficit, and to include subsidies in the budget.

Both parliament and the Shura Council have objected to the government's plans to save money by axing subsidies, with MPs last week threatening to veto the stalled budget for 2015 and 2016 altogether - and even resign - if subsidies are reduced.

The government needs to make savings due to lower revenues, which are expected to reach a total of BD4.255 billion in 2015 and 2016, compared with anticipated expenditure of BD7.292 billion over the same period.

A dramatic drop in the oil price, which accounts for more than 80 per cent of government revenues, has contributed significantly to a reduction in national income. As a result, Bahrain is facing a fiscal deficit of BD1.47 billion this year and BD1.563 billion next year. - TradeArabia News Service
 




Tags: Bahrain | plan | Subsidies | Review |

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