Bahrain’s National Assembly has made drastic changes to the proposed budget, including increasing housing spending by BD240 million ($632.2 million) and reducing the government’s recurring expenditure by BD850 million.

MPs and Shura Council members also want the government to reduce the financial support to national carrier Gulf Air by BD60 million, and increase social allowances given to pensioners and the disabled, said a report in the Gulf Daily News (GDN), our sister publication.

The financial and economic affairs committees of both chambers have agreed on five core changes to the budget for this year and the next ahead of their meeting with the Cabinet, represented by the Finance Ministry, on Sunday.

Yesterday’s joint meeting at the National Assembly Complex in Gudaibiya followed the announcement of government plans to axe subsidies and compensate eligible Bahrainis with payments into their bank accounts.

However, legislators demanded the government direct subsidies to all Bahrainis without discrimination.

“We have successfully united with parliament on joint demands that we want the government to look into, if we are to accept giving the budget the go-ahead,” said joint committee chairman and head negotiator Khalid Al Maskati.

“Spending on projects has to be reduced by five per cent, and we will negotiate pushing back projects that can be delayed with plans to save BD100 million from each year and other recurrent expenditure. We believe this way it is possible to save BD850 million.

“Also, pensioners have to get a BD30 increase to their monthly allowance, along with an increase to the allowance given to the disabled from BD100 to BD200 a month.

“The government has to build 25,000 homes within the next four years and we believe that the allocated money is not enough and we want that increased by BD240 million.”

Al Maskati, who is also the Shura Council’s financial and economic affairs committee chairman, said redirecting or axing subsidies should be done gradually in co-ordination with the National Assembly.

“Subsidies have to continue being given to Bahrainis, without differentiation, without us interfering in the system, but it has to be approved by us,” he said.

“Also, financial support given to Gulf Air will have to be reduced by BD30m each this year and the next as we make the airline less dependent on the government.”

MPs on Tuesday 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 this year and BD315.7 million next year, followed by the removal of oil and gas subsidies.

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