Bahrain's budget for 2015 and 2016 was narrowly approved by the parliament yesterday (July 2).

Twenty-two MPs voted in favour of the new-look budget, which scraped through by just two votes, after a delay of more than six months, said a report in the Gulf Daily News (GDN), our sister publication.

Representatives of parliament, the Shura Council and the Cabinet agreed on the revised version of the two-year budget last Monday.

However, 12 MPs voted against it yesterday, two abstained and four did not show up to vote at the extraordinary session.

MPs Jamal Dawood and Roa’aa Al Hayki, both abstained, while those absent were MPs Abdulla Bin Howail, Mohsin Al Bakri, Mohammed Al Ammadi and Abdulrahman Buali.

The budget has now been referred to the Shura Council, which is expected to vote on Sunday.

If approved it will be ratified by His Majesty King Hamad and implemented immediately, backdated to January.

“It is the most difficult budget that we had to deal with in the past 12 years,” Finance Minister Shaikh Ahmed bin Mohammed Al Khalifa told MPs yesterday.

“We realise that people deserve a lot, but revenues are low and we have to make sure future generations do not pay the price of our decisions now.

“We have to realise the more we borrow, the more our currency gets devalued, so we have to be content with what we have and spend according to capabilities.”

The government-drafted budget underwent several changes before being approved.

Oil prices have halved since June last year as a result of oversupply.

At least 80 per cent of Bahrain’s revenues come from oil, which means the country has to find ways to reduce spending – in addition to increasing the debt ceiling from BD5 billion to BD7 billion last November.

“We agree that our plans need modification to ensure more revenues other than dependence on oil, but several legislations will have to change,” said Shaikh Ahmed.

“Unfortunately, we will have to collect more from the public. Those we have in mind are companies, non-Bahrainis and well-paid Bahrainis.”

He added Bahrain had identified family tourism, logistics and transportation as emerging sectors to generate national income.

“The government is approaching those sectors, but again we are an open economy and the private sector needs space,” he said.

He added that budget approval was required so that social welfare payments could be distributed, adding that Bahrain planned to borrow money to fund public spending both domestically and from abroad.

“We need to borrow 50 per cent from here and 50 per cent from abroad,” he said.

“Our window opens in September-end or early October, so if the budget is approved now then we can meet that – which means that we will find good lenders.

“The government is willing to borrow despite challenges and that’s for the sake of medium and low-income Bahrainis.”

However, the minister warned that the public would suffer from parliament’s insistence on injecting BD20 million from the Eskan (Housing) Bank into the national budget as revenue.

“That money is used to cut remaining payments for punctual payers and support those facing trouble paying,” he said.

“It also gets circulated to others waiting for housing services.”

The revised budget will increase the projected deficit by a total of BD28 million over the two-year period.

In the new version subsidies will not be axed without approval by a joint committee representing the government, parliament and Shura Council, with plans to scrap meat subsidies up for negotiation.

It also increases disabled allowances from BD100 to BD200 a month depending on disability, while pensioners getting monthly pensions of less than BD700 will receive a one-off bonus of BD360 this year – rather than BD30 a month originally sought by parliament and the Shura Council.

As a result the budget deficit, originally estimated at BD1.474 billion this year and BD1.563 billion next year, will increase to BD1.504 billion in 2015 – but drop to BD1.505 billion in 2016. - TradeArabia News Service