Bahrain’s budget deficit nearly doubled in the first part of the year, due to the double hit of the Covid-19 pandemic and low crude oil prices.
Figures published through the Ministry of Finance and National Economy showed that government revenues in the first part of 2020 fell to BD 910 million ($2.4 billion), 29 percent less than at the same time last year. Oil revenues fell by 35% as crude oil values fell amid declining global demand and a war for value led by Saudi Arabia and Russia.
Non-oil activity was also affected, with revenues falling by 13% year-on-year due to exemption from government service fees, the coronavirus pandemic and the global economic slowdown.
Cabinet secretary Yasser bin Issa Al-Nasser said the government had shown “discipline” in its spending habits, with a 5% drop in “recurring spending.” However, total spending increased by 2% to BD by 1.7 billion, as the government took steps to alleviate the crisis through an economic recovery plan.
As one of the smallest and weakest economies in the Gulf, Bahrain is suffering to deal with the situations it has faced this year. The combination of a sharp drop in revenue and solid spending boosted the budget deficit to 798 million comics, up 98 percent compared to the same time last year.
Excessive spending in the first six months of this year outweighs last year’s deficit as a whole. At Monday’s regular weekly cupboard meeting, the government reviewed the final accounts of 2019, in which Bahrain recorded a deficit of BD 683.7 million. Revenues were 3% higher than expected, while they spent 1% above the budget target.
As a component of its balanced budget program introduced in 2018, the government is expected to aim to balance its budget until the end of 2022. Although significant progress was made towards the goal last year, the economic situation it now faces means that this purpose could now be out of reach.
It may take some time for situations to begin to improve. London-based consulting firm Capital Economics expects Bahrain’s economy to contract 4.5% year-on-year, before recovering part of the lost flat next year.
Dominic Dudley is a freelance journalist with nearly two decades of experience in business, economic and political reporting in the Middle East, Africa, Asia and
Dominic Dudley is a freelance journalist with nearly two decades of experience in information on business, economics and politics in the Middle East, Africa, Asia and Europe.