Alternatives to subsidy cuts must be found as Bahrain seeks to rein in public spending, a joint meeting of MPs and Shura Council members announced yesterday (May 24).

Shura Council financial and economic affairs committee chairman Khalid Al Maskati, who chaired the meeting, said that the government should go after the 'millions of dinars' owed from outstanding electricity, water and municipal bills instead and recalculate forecast oil revenues for the next two years, said a report in the Gulf Daily News (GDN), our sister publication.

“We have to look for alternative solutions that reduce the deficit without affecting subsidies in any way, shape or form,” he said following a closed meeting on the budget held at the National Assembly Complex in Gudaibiya.

“In all cases, the numbers quoted for subsidy spending are not expected and cannot be seen as a contributor to the deficit or be held responsible for unnecessary spending.”

Al Maskati did agree with redirecting subsidies if necessary, but said it would be better to find the money elsewhere.

“There are millions of dinars owed from outstanding electricity, water and municipal bills that could help fund projects and services,” he said.

“Besides this, a new calculation must be made for oil and gas revenues that are more realistic and not so conservative.”

The government is planning to spend BD7.292 billion ($19.3 billion) over the next two years and is expecting BD4.255 billion in revenue over the same period based on a forecast oil price of $60 per barrel.

This will result in a predicted budget deficit of around BD3 billion.

Bahrain raised its debt ceiling from BD5 billion to BD7 billion in November and officials expect the national debt to reach more than BD9 billion by 2020.

Finance Minister Shaikh Ahmed bin Mohammed Al Khalifa previously told the National Assembly that Bahrain spent BD935 million on subsidies last year alone.

Last week, the Cabinet announced plans to reduce spending by BD386m per annum by axing meat subsidies, reducing subsidies for other services and curbing ministry spending.

This subsidy reform has been proposed in a bid to save money in the face of lower oil prices, which have dramatically reduced national revenues.

However, last week 20 MPs signed an urgent request to postpone the scrapping of meat subsidies - due to come into effect on August 1 - as they said it was 'too short notice'.

Energy Minister Dr Abdulhussain Mirza and officials from the National Oil and Gas Authority were also present at yesterday's meeting. - TradeArabia News Service