MPs vow to keep subsidies intact

MPs have pledged to ensure that Bahrainis continue to benefit from social welfare schemes worth millions of dinars, despite the current economic crisis caused by Covid-19 and slumping oil prices.

Legislators are set to receive the 2021-2022 budget from the Cabinet at the start of the new term next month.

They are expecting the budget to be drawn up on the basis of an oil price of $40 to $45 per barrel.

They believe it’s a balanced price to expect, considering that Brent crude is currently selling at $41.65pb. Bahrain has been calculating its budget over the years at $60 per barrel.

Parliament financial and economic affairs committee chairman Ahmed Al Salloom said some development plans will have to be put on hold owing to budget constraints.

However, he ruled out cuts or even negotiatiations over welfare schemes.

“We will have to put a lot of projects on hold for the time being due to the damages caused to global economies by Covid-19 and slumping oil prices,” he said.

“Bahrain ran up a deficit of BD700 million until June this year.

“With the government so far spending more than BD180m to combat Covid-19 and more to come, we have to be considerate.

“We understand the tough times, but people’s social welfare payments will not be touched, even by a single fils, and this commitment is not up for negotiations, as people are already suffering enough in 2020,” he said.

Mr Al Salloom was speaking at a webinar on ‘Future spending at tough times’ organised by fellow MP Ebrahim Al Nefaei.

Welfare schemes cost the government BD385m a year. Around 121,000 Bahrainis receive anti-inflation allowance of BD100, BD70 and BD50 depending on their monthly income at a cap of BD1,000, with the total cost reaching BD128m annually.

A total of 16,486 Bahrainis also benefit from social welfare at a cost of BD21m annually, with an individual receiving BD70 and a couple receiving BD120, while extra payments of BD25 are made per additional family member.

A total of 11,530 Bahrainis with disability also receive BD100 a month at an annual cost of BD19m.

The welfare schemes also include meat allowance dispensed since subsidies were lifted in 2016, with 162,000 Bahrainis receiving direct payments at a cost of BD28m annually.

Around 46,000 families also benefit from a BD100 monthly housing allowance at a cost of BD57m annually.

The Cabinet last month allowed the Finance and National Economy Ministry to increase the borrowing cap from BD13 billion to BD15bn to cover finances in the national budget, fund expenditure and other expenses, alongside repaying existing loans for this year and 2021-2022.

The MPs have now asked the government to draw up a plan on possible privatisation of services to reduce costs and spending further.

“The private sector needs to step in and work with the government under mutual benefit deals that don’t lead to disruption of services and their continuation at reasonable rates,” said Mr Al Salloom, who is also Bahrain Chamber of Commerce and Industry (BCCl) board member.

Authorities ramped up borrowing after the mid-2014 oil price crash, which significantly diminished national revenues and put the country in the red.

As a result the national debt reached BD11.739bn in the third quarter of 2018, the equivalent of 88.4 per cent of GDP – having stood at just 13pc in 2008.

Budget data shows that interest of BD640m is due for payment last year, followed by another BD697m this year.

The budget is not ratified by His Majesty King Hamad without Parliament and the Shura Council’s approval.




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