Government presents two budget options to parliament to address soaring public debt

TDT | Manama

Email: mail@newsofbahrain.com

A government-parliamentary meeting was held yesterday to discuss the public financial strategy for the coming years, along with the current state of public debt and financial balance. This was confirmed by MP Ahmed Al Saloum, Head of the Financial and Economic Affairs Committee in the Council of Representatives. During the meeting, the government outlined its financial balance programmes aimed at mitigating increases in public debt and reducing accumulated deficits.

Public debt

Al Saloum noted that the coverage ratio of public debt interest reached 21% of total revenues in 2023 and is projected to rise to 35% if the current budget remains unchanged. This increase could significantly impact government projects, services, and various other budgetary items. “The government presented two options to the Council of Representatives. The first option involves maintaining the existing budget, which would result in a deficit of BD6 billion, encompassing expenses and public debt interest. In this scenario, public debt could rise to BD24 billion,” he said.

Second option

“The second option focuses on formulating ministry budgets based on needs and efficiency, utilising a new “zero-based” budget that reflects these requirements and aims for a lower deficit in public debt management expenses of BD2 billion. This option does not foresee any financial surplus but seeks to improve debt management efficiency through bond issuance,” he added. Al Saloum added that the government aims to reduce the ratio of public debt to GDP to 60%. Achieving this target, according to government projections, would secure Bahrain’s financial standing and lead to a desired reclassification of the Kingdom in the medium term through gradual plans. Currently, the public debt to GDP ratio is approximately 103% and is expected to reach 110% by year-end. He clarified that the MPs did not attend this preliminary meeting to present demands or discuss detailed figures. Instead, their purpose was to review achievements over the past six years and to align on the new budget items, which they hope will be flexible and free from excessive commitments, while aiming for primary surpluses at the start of budget implementation.

Modifications

Al Saloum also indicated that the government plans to present modifications to several laws to the representatives in the coming two weeks. These amendments aim to expand the framework of financial efficiency and reduce expenditures by focusing on infrastructure and regulating spending, ultimately contributing to improved overall economic performance.