Bahrain expects to post a deficit of 1.2 billion dinars ($3.2 bn) in 2021, state news agency BNA said, citing the finance ministry.
The oil-producing Gulf state projected a budget of 3.6 bn dinars ($9.55 bn) for 2021 with revenues expected to amount to 2.4 billion dinars ($6.4 bn), BNA said.
For next year, total expenditure is estimated at 3.57 billion dinars ($9.5 bn), against total revenues of 2.46 billion dinars ($6.52 bn), resulting in a slightly lower deficit of 1.1 billion dinars ($2.92bn).
Bahrain’s economy contracted by 5.4% last year, according to the International Monetary Fund (IMF), as the COVID-19 pandemic hurt vital sectors such as energy and tourism.
Bahrain which based the 2021-2022 budget on an oil price assumption of $50 a barrel, expects the economy to grow 5% this year, BNA said on Tuesday, March 3.
In 2018, Bahrain received a $10 billion financial aid program from Gulf allies that helped it avoid a credit crunch, but it also tied it to a set of fiscal reforms.
“This budget makes clear Bahrain’s continued commitment to the Fiscal Balance Program, despite the unprecedented challenges of COVID-19, with core government expenditure remaining under tight control,” Finance and Economy Minister Sheikh Salman bin Khalifa al-Khalifa was quoted as saying.
Public debt rose to 133% of GDP last year from 102% in 2019, the IMF said.
Higher deduction from oil sales
The Bahraini government will present a bill in parliament in the next few months to allow the Future Generations reserve fund to take higher deductions from oil sales, the state news agency Sheikh Salman bin Khalifa al-Khalifa as saying.
The deductions will help to replace money withdrawn from the fund to support the general budget as part of efforts to tackle the coronavirus outbreak, the minister said.
The International Monetary Fund said this month that Bahrain’s economic recovery from the COVID-19 pandemic will be gradual, with growth projected at 3.3% this year.
New tourism strategy
Industry, Commerce, and Tourism Minister Zayed Alzayani, who is also Bahrain Tourism and Exhibitions Authority (BTEA) chairman, told MPs that Bahrain will offer attractive tourism packages in a bid to woo all categories of visitors.
He revealed that the strategy was set to be launched in 2020 but the global pandemic and subsequent travel restrictions stopped the plans.
“We just had the new BTEA board formed and fresh plans on the table,” said Alzayani, “but it would have been a waste of money if we had started them last year.”
“Our five-star hotels are cheaper than most four-star hotels in the region and many other tourist capitals around the world.”
He added that a proposal had been tabled to operate a special port for cruise ships, and has been approved.
“Currently cruises dock at Khalifa Bin Salman Port in Hidd and that’s not ideal when people have to move between trucks and cargo arrivals,” said Alzayani.
“The plan is to become a port of call and choice in the Gulf rather than just taking a share with others. Over time with this will mean more stays in hotels and visits to our inland attractions.”