A dramatic drop in oil prices over the past six months could force Bahrain's government to change the way it calculates its national budget, it was announced.

Oil accounts for more than 80 per cent of Bahrain's revenues, but its global price has more than halved since last June and dropped below $50 per barrel for the first time since 2009, said a report in the Gulf Daily News (GDN), our sister publication.

That has resulted in a significant decrease in the country's revenues, which are used to fund social welfare schemes, subsidies, infrastructure development, social housing and other public sector spending.

The Cabinet is yet to submit its proposed two-year national budget for 2015 and 2016 to parliament and Information Affairs Minister and official government spokesman, Isa Al Hammadi, told a Press conference yesterday (January 12) that it was evaluating whether a flexible rate could be used to calculate the budget given the dramatic slump in oil prices.

However, he said the government's four-year work plan, submitted to parliament last Tuesday, had already taken into account the drop in oil prices.

“The national budget is just one mechanism and we are working to ensure people's and parliament's demands are not affected directly or indirectly,” he pointed out.

“Our blueprint has been adjusted accordingly to meet (people's) demands steadily.

“The budget is for two years while our blueprint is for four, so things are being managed in line with that and the government is currently studying a flexible rate on which the budget could be based on.”

He added that government schemes were not only dependent on revenues, but would also be financed through the $10 billion aid package pledged by Bahrain's GCC neighbours in the wake of unrest in 2011, private sector investment and through borrowing.

“To meet the blueprint we will not just depend on oil revenues,” said Al Hammadi.

“We have the GCC aid, the private sector and borrowing to help us maintain our promises and ensure people's lives are not affected negatively,” the minister explained.

He said parliament had a February 6 deadline to respond to the government's four-year blueprint.

“Once it gets approval from the part of lawmakers, the Cabinet would then move forward on the budget,” the minister stated.

“We are keen in the government to have the budget prepared in a rapid manner and approved through parliament and the Shura Council to ensure there are no delays in intended projects,” added Al Hammadi, who was speaking after the Cabinet's weekly session at Gudaibiya Palace.

He said there were no plans to scrap a monthly 'anti-inflation' allowance provided to low-income Bahraini families and said projects dating back to 2013, which had budgets assigned but never went ahead, would proceed as planned. - TradeArabia News Service