Bahrain's government is studying plans to redirect subsidies without compromising the middle and lower classes.

'We are keen essentially not to encroach on the interests of the medium and low-income earners or put any additional burden on them whatsoever,' Finance Minister Shaikh Ahmed bin Mohammed Al Khalifa said.

He was responding to media reports that the government intends to slash subsidies in key sectors and services.

He revealed that plans to 'redirect subsidies' would target opulent sectors, companies and non-Bahrainis.

Middle and low-income earners will continue to benefit from social umbrellas under the coming two-year state budget 2011-2012.

'Government subsidies have swollen over the years, soaring to unprecedented levels,' he said.

He described the 'inflated subsidies' as a real challenge defying the government's capacity to honour the necessary budgeted spending schemes and to continue the development momentum,' he said

Shaikh Ahmed also revealed plans to boost other social-oriented initiatives, citing the Social Insurance Fund, the Insurance against Unemployment programme and Tamkeen.

'These schemes have had a direct impact on social programmes over the recent years,' he said.

He credited the government's sound financial policies for enabling Bahrain to withstand the global meltdown.

'These same policies will continue to be a cornerstone to achieve financial discipline and consolidate the state budget,' he said.

Shaikh Ahmed pointed out Bahrain's success in taming the repercussions of the global crisis, earning international recognition.

He cited particularly its drive to optimize available resources and prioritize sectors and projects directly impacting citizens' daily life and national economic performance.

'These sound policies ensured a rate of economic growth standing at 3.2 per cent last year', he said, forecasting 4% for 2010.

He also pointed out the Government's success in taming unemployment at the level of 3.6%.  - TradeArabia News Service