Bahrain's budget deficit has increased up to five-fold in the last 10 years, a senior government official said, adding that in 2002 the figure stood at 1.8 per cent and is expected to reach around 9.7 per cent this year.

Finance Minister Shaikh Ahmed bin Mohammed Al Khalifa warned MPs not to push unrealistic spending plans on the government and put Bahrain's economic strength in jeopardy.

Shaikh Ahmed said the government was already taking risks despite the international financial crisis in response to fresh demands for new projects.

'We have to take into consideration that for us not to see any deficit, the oil barrel price should be at an average $124,' he said.

'We don't want to go on spending without control and see the same fate some European countries are facing at the moment with many out of jobs or without homes. Bahrain's economy will be in jeopardy if our spending doesn't match our resources and we have to be realistic in spending and stop taking decisions based on emotions because it is taking us on a wrong path.'

Shaikh Ahmed was responding to a question by MP Mohammed Buqais on why pensions had not been increased.

'The demands to increase pension payouts is genuine and MPs can always negotiate with us when we discuss the new budget for next year and 2014 to shift funds from housing to support the Pension Fund Authority (PFC),' he said.

'The PFC's funds are contributions made by workers and payouts given as pensions match their input with some government support, but we can't give more privileges from someone's savings to make another happy.

'When the time comes for future retirees, what will the PFC give them, if the funds are drained?'

Shaikh Ahmed said nearly half of Bahrain's pensioners got a 25 per cent rise in their pensions last year, adding MPs should stop flexing their muscles on issues that do not match Bahrain's financial reality.

However, his comments sparked an angry response from MP Abdulhaleem Murad, who jumped from his seat and demanded the statement be removed from records.

'The government has just given BD400 million ($1.06 billion) to Gulf Air and now it is planning to give it around BD700m, which is more than a billion that could have been spent to increase pensions and make many families happy,' said Buqais. – TradeArabia News Service