Bahrain’s new-look national budget for 2015 and 2016 cleared its final hurdle yesterday (July 5) when it was unanimously approved by the Shura Council.

Thirty-eight members voted yes to the new national budget, which will now be ratified by His Majesty King Hamad, while two members were absent, said a report in the Gulf Daily News (GDN), our sister publication.

The revised budget has already been approved by MPs and will be backdated to January, as it is already six months late.

The National Assembly’s opposition to the government’s plans to slash subsidies, as well as disagreements over the distribution of funds, were key reasons for the delays.

A massive drop in the oil price – which has halved since last summer – also meant the original draft was late in being presented to the National Assembly.

Bahrain has had to find ways to rein in spending, with oil revenues accounting for at least 80 per cent of the country’s revenues.

The final version was agreed in principle last Monday by representatives of parliament, the Shura Council and the Cabinet.

“We are improving in our spending and violations mentioned in the Financial Audit Bureau are reducing as we lower the gap in what we allocate and what we use,” Finance Minister Shaikh Ahmed bin Mohammed Al Khalifa told the GDN yesterday.

“Any ministry or government body that faces difficulty pushing ahead with projects will be provided with assistance, but as I have been told all are ready to issue bulk tenders for work to begin on scheduled projects.”

Bahrain raised its debt ceiling from BD5 billion ($13.1 billion) to BD7 billion last November to enable increased borrowing in light of lower national income.

Meanwhile, Shaikh Ahmed denied allegations that the government was hiding oil revenues as he appeared in the Shura Council yesterday.

“We have lenders giving Bapco financial support, so for every barrel we export we take $1 just for calculation – so the oil company would repay what it owes with the remaining amounts directly transferred to us,” he said.

“No extra revenue is hidden, it is just like a head count. Oil is not sold for one dollar, as some are claiming.”

Shaikh Ahmed said the government would now work with legislators in both parliament and the Shura Council on an overhaul of the subsidy system that everyone agreed with.

“We have to control the huge spending that far exceeds our budget and allow our economy to grow at the same time,” he said.

“Government authorities like the Electricity and Water Authority (EWA) have their own budget, which is circulated as revenue and spending, that we just supervise and support wherever possible and it doesn’t enter our coffers – unlike ministries and government bodies that are directly under us.

“Security contains everything, even economic stability, and for that we have not changed its allocated spending.”

Council chairman Ali Saleh Al Saleh told the GDN that any additional spending in the budget would have damaged the national economy.

“There were no alternatives and the government’s willingness to wait on axing subsidies is good, considering that a three-sided committee from the Cabinet, the Shura Council and parliament is set to meet in the next few days to map out new systems,” he said.

“We have a huge total deficit of BD3 billion in the budget for this year and next, which needs immediate attention in any way that does not affect Bahrainis.”

Twenty-two MPs voted in favour of the budget on Thursday, while 12 voted against, two abstained and four did not show up.

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

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