Bahrain is making good progress on its fiscal consolidation
plan and is on track to eliminate its deficit by 2022 as planned, Finance
Minister Sheikh Salman bin Khalifa Al Khalifa has said.
Bahrain, which does not have the vast oil wealth
of fellow Gulf states, was hit hard by the 2014 slump in crude prices. The
kingdom released a plan last year to overhaul its economy and fix its
debt-burdened finances, aided by a $10 billion aid package from Saudi Arabia,
Kuwait and the United Arab Emirates.
“We’ve had very good execution so far,”
al Khalifa told Reuters, when asked if Bahrain would meet its target. “We’ve
been very disciplined with regards to executing the fiscal balance plan and
ensuring that we’re executing with regards to the targets.”
Sheikh Salman bin Khalifa Al Khalifa said
Bahrain had reduced its deficit by 37.8% in the first six months of 2019, while
increasing non-oil revenue by 47%. It also cut administrative costs by 14% and
had 18% of civil servants accept voluntary retirement packages.
It was critical to ensure job creation, and
spending on health, education and other social services spending remained
strong as Bahrain continued its consolidation program.
“As we continue to execute the fiscal balance
plan, we will want to ensure that we continue to see positive economic growth
and job creation,” he said. A September
bond issue, the country’s first since the fiscal balance plan was launched,
sparked good demand and with much tighter pricing than its previous bond issue. He gave no
details on borrowing plans for the coming year, but said half of borrowing
needs would be met by the aid package from Saudi Arabia, UAE and Kuwait, and
half from the market. As well as introducing a value-added tax in January,
the government has cut subsidies, raised fees and is pushing economic
diversification and inward investment.
Al Khalifa said job creation had been a
heavy focus during the International Monetary Fund and World Bank fall meetings
in Washington this week. “Maintaining economic growth is important but job
creation is important regardless of where you are in the business cycle”
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