Bahrain’s borrowing reaches BD13 billion

BAHRAIN’S current government debt constitutes around 118 per cent of its gross domestic product (GDP), it has emerged.

The Finance and National Economy Ministry told the Shura Council’s financial and economic affairs committee that Bahrain’s borrowing reached BD13 billion at the end of last year.

The Shura Council in its weekly session on Sunday is set to debate a Royal Decree issued by His Majesty King Hamad during the National Assembly recess to amend the 1977 Bonds Law to increase the ceiling of borrowing to BD15bn.

“We need to borrow more to cover the deficit in the national budget besides repaying loans throughout the year,” said the ministry.

“Additional financing is a must to fund strong necessities in the 2021-2022 national budget and our projection is that the ceiling of BD13bn limited us and for that it had to go up to around BD14.8bn to BD15bn,” it added.

“The deficit is 118pc of the GDP but we are co-ordinating with credit rating agencies and providing them with financial details and initiatives to maintain our rating.

“The BD15bn ceiling doesn’t affect our Fiscal Balancing Programme and we are working to reduce general spending and increase revenues.”

The ministry said increasing the ceiling was one of its procedures to deal with emergency spending and introducing financial and economic packages to revitalise the private sector, while limiting the impact on the local workforce.

“Last year, we managed to maintain the effects of Covid-19 in partnership with the private sector and through local funds and state-owned companies to reduce our financial burden.”

“We have a comprehensive plan to increase non-oil revenues and support non-oil sectors and activities.

The ministry revealed it would have to repay BD1.37bn this year with BD708m interest and BD1.269bn with interest of BD757m next year.

Committee chairman Khalid Al Maskati said borrowing was expected to reach BD14.9bn by the end of next year.

“Due to the slump in oil prices last year, the government faced a shortage of BD918m in funding for the remaining period of 2020,” he said.

“In addition to this, there was also a previous financial commitment of BD367m due in January.

“Before the decree was issued to increase the ceiling the government fell short of reaching BD13bn by BD673m.

“The decree to increase the ceiling was necessary to avoid getting loans in the best shape and price with the slump in oil prices and slow economic progress due to Covid-19 with Bahrain committed to repay existing loans last year.

“The international prices are an opportunity with lowered costs as financing is needed for requirements here.”

Source: https://www.gdnonline.com/Details/938632/Bahrain%E2%80%99s-borrowing-reaches-BD13-billion