National budget clears final hurdle, gets Shura Council's approval

BAHRAIN’S national budget for 2019-2020 has passed its final legislative hurdle.

The Shura Council members gave it their stamp of approval despite learning that the public debt would reach a new high by the end of next year.

Thirty-seven members present during the weekly session yesterday unanimously approved the budget following assurances by Finance and National Economy Minister Shaikh Salman bin Khalifa Al Khalifa that the government has already anticipated future outcomes under its Fiscal Balancing Programme.

The GDN reported last week that the government agreed to increase social welfare spending from BD380 million to BD435.6m each year and inject BD30m into the national coffers each year from sovereign wealth fund Bahrain Mumtalakat Holding Company in addition to BD56.4m each year from Nogaholding.

Forecast revenues have increased from BD5.61 billion to BD5.76bn over the two-year period, with BD2.81bn expected this year and BD2.95bn next year.

General expenditure is estimated at BD7.058bn for both years – BD3.51bn this year and BD3.55bn next year.

The budget deficit for the two years now stands at BD1.3bn, reaching BD696m this year and BD600.7m next year.

Parliament last Tuesday also authorised additional borrowing from financial institutions, as well as Arab and Islamic funds.

Interest on government loans would reach BD640m this year and BD697m next year.

“We have already drawn up everything from the moment we announced the Fiscal Balancing Programme in October last year and even with plans to reduce deficits and increase revenues we have always taken public welfare and the continuation of direct payments as a priority,” said Shaikh Salman.

“For a decade the plan was always to seek positive growth with attention to spending and revenues, but positive growth had negative impact on our economy, as the government was making nothing in return,” he added.

“Now, we are getting the cost of government services whether from businessmen or expatriates and we will work towards future surplus and not just reducing the deficit.

“This year the deficit is lower than what it was last year by 50 per cent as we introduced huge initiatives like the early retirement scheme and slashing recurrent expenditure.”

The minister also pointed out that interest on loans, which accounted for the largest spending, is being tackled differently.

However, several members expressed worries over finance and economic affairs committee secretary Redha Faraj’s comments that public debt would be around BD13bn by the end of next year, which is around 93pc of the gross domestic product (GDP).

“We are worried as the situation is very dangerous,” said legislative and legal affairs committee vice-chairman Khamis Al Rumaihi.

Finance and economic affairs committee chairman Khalid Al Maskati said protecting people’s welfare was the top-most priority.

“We have managed to increase spending in the 10 social welfare chapters by an average 5pc, while having 17pc saving in spending and 2pc deduction if public debt is taken into account,” he said.

“The public debt is huge, but it is manageable through determination from all concerned parties.”

Shura Council chairman Ali Saleh Al Saleh said the figure was huge, but that was the truth.

“There has to be real work to protect the economy taking into account future financial challenges and ways to overcome them.”

First vice-chairman Jamal Fakhro said the government needed to figure out the public debt by 2022, even with the Fiscal Balancing Programme addressing current and mounting financial woes.

Second vice-chairwoman Hala Fayez said the drop in the number of government employees through the early voluntary retirement scheme was just a solution, while the most affected are the health and education sectors.

Member Dr Ahmed Al Arrayedh said high spending on consumption has contributed to the imbalance, while Mona Almoayyed said taxes introduced in Bahrain like the VAT just made money from the poor not the rich.

MPs approved the budget during their weekly session last Tuesday after obtaining government assurances about social welfare spending.

It will now be ratified by His Majesty King Hamad.

Source: http://www.gdnonline.com/Details/539010

 

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