BD8.9bn Spending, BD2.5bn Deficit in Bahrain’s 2025–2026 Budget

TDT | Manama
Email : editor@newsofbahrain.com

Bahrain’s 2025–2026 budget lays out BD8.9 billion in planned spending against BD6.4 billion in income, leaving a shortfall of BD2.5 billion, fuelled largely by interest payments that account for nearly a quarter of annual outgoings.

Revenue for 2025 is expected to reach BD2.92 billion, rising to BD3.46 billion by 2026. Spending will climb alongside this, from BD4.38 billion to BD4.54 billion. The gap, BD1.45 billion in 2025 and BD1.08 billion in 2026, is to be bridged by borrowing, primarily from financial institutions and regional lenders.

Income from oil and gas, still the backbone of the treasury, is gradually giving ground to other sources. After allocating funds to the Future Generations Reserve, oil revenue is set at BD1.49 billion in 2025 and BD1.63 billion in 2026. Meanwhile, revenue from tax and services is quickly rising, from BD1.43 billion to BD1.83 billion over the two years.

VAT and excise taxes, managed by the National Bureau for Revenue, will generate BD756.9 million in 2025 and BD866.8 million in 2026. Customs duties will provide just over BD112 million annually. Earnings from state-owned firms—including Eskan Bank, Bapco Energies, and Mumtalakat—are estimated at around BD185 million each year.

Other ministries are also increasing their contributions. Revenue from the general public services sector will triple from BD114.3 million to BD368.2 million, helped by the Survey and Land Registration Bureau, expected to bring in over BD17 million annually. Miscellaneous fees and charges will rise from BD90.5 million to BD343.6 million.

Public Order and Safety, led by the Ministry of Interior and Customs, is expected to generate nearly BD200 million each year. Economic ministries—Transportation and Telecommunications, Industry and Commerce, and Works—will collect BD126.7 million in 2025 and BD142.4 million in 2026. Health sector income, including the Supreme Council of Health, will rise from BD43.6 million to BD50.1 million. The Youth, Culture and Media Sector will provide around BD1.4 million annually, with the education sector contributing roughly BD727,000.

On the spending side, recurrent expenses dominate, at BD4.1 billion in 2025 and BD4.26 billion in 2026. Social welfare receives the largest allocation—over BD770 million annually. Retirees will receive BD298 million per year, with BD312.6 million earmarked for the Citizen Account and another BD54 million reserved for rent subsidies.

Education is allocated BD354 million each year, covering the Ministry of Education, universities, and training bodies. Health follows closely at BD360 million annually, nearly half going to government hospitals. Defence spending remains steady at BD550.8 million, with Public Order and Safety rising slightly to BD471.6 million in 2026.

Spending by economic and infrastructure ministries will rise slightly from BD115.4 million to BD118.9 million, driven by the Ministry of Works and the Economic Development Board. Housing and community amenities will receive around BD13 million each year, and environmental programmes will maintain a steady BD6.8 million.

The impact of public debt is stark. Interest payments alone will reach BD1.03 billion in 2025 and BD1.16 billion in 2026—making it the largest budget line outside social protection. Higher borrowing costs and accumulated debt have created a significant fiscal burden.

A contingency reserve of BD119.6 million in 2025 and BD124.1 million in 2026 is also set aside for unexpected expenses.

Despite fiscal pressures, infrastructure investment will continue steadily at BD275 million annually. The Ministry of Works will receive BD60 million each year, with BD81 million allocated to housing. The Ministry of Interior is earmarked BD7.4 million per year for its projects, and the health sector will receive BD2.35 million. Education infrastructure funding is set at BD11 million in 2025, rising slightly to BD11.6 million in 2026. Youth, culture, and sport programmes will get BD8 million and BD6.6 million over the two years, supporting the General Sports Authority and Bahrain Authority for Culture and Antiquities.

Locally, municipalities are expected to raise BD105 million in 2025 and BD110 million in 2026. Operating expenses are set at BD69.4 million and BD70.2 million, respectively, with BD30 million per year earmarked for local improvement projects, bringing total local spending to about BD100 million annually.

Overall, Bahrain’s 2025–2026 budget demonstrates ongoing financial strains. Tax revenue is rising, oil remains steady, and infrastructure projects continue. Yet, with rising debt repayments and sustained demand for social spending, balancing the books remains a challenging task.