Balanced budget by 2020

Bahrain is on track to achieving all the objectives outlined in the Kingdom Fiscal Balance programme including delivering a balanced budget by 2022, said Minister of Finance and National Economy. Citing preliminary data during the first half of 2019, Shaikh Salman bin Khalifa Al Khalifa revealed that the Kingdom’s deficit fell by “38 per cent, non-oil revenues increased by 47pc, and oil revenues increased by 10pc, compared with the same period in 2018.”

He said the Kingdom will strengthen its financial planning to align its non-oil revenues with economic growth. Shaikh Salman was participating in a panel discussion at the Future Investment Initiative (FII) alongside Minister of Finance of Saudi Arabia Mohammed bin Abdullah Al-Jadaan and Kuwait’s Minister of Finance Dr Nayef Falah Al-Hajraf. The topic was “MENA is open for business: How the Middle East became an international investment powerhouse”.

On private sector’s role in the economic slowdown, the Minister said Bahrain is currently undertaking a long-term economic strategy to drive non-oil growth as well as create and sustain a fertile business environment which is conducive to sustainable growth. “The government will continue to provide the conditions necessary for the private sector to flourish, noting that private investments have a greater multiplier effect on the economy.

Explaining, Shaikh Salman said, “When the government leads a project, it’s putting a dollar or a riyal or a dinar into the economy.” “When the government changes or creates a new legislative environment, it’s allowing the private sector to embark on many projects, many riyals, many dinars, and therefore the multiplier effect is much larger when you do a reform of a sector.” The Minister underlined that these diversification efforts continue to yield tangible results across all sectors especially in the form of over 7pc annual growth in the non-oil sector in the past 10 years with oil now representing 20pc of the GDP.

Two out of three Bahrainis are employed in the private sector, with them receiving a 4pc increase in wages compared to the same period last year. Bahrain also recorded a fourfold increase in the non-oil sector in the last 15 years. The Minister stated that the biggest validation of this positive economic transformation can be seen in the 2019 World Bank ‘Doing Business’ Report, which recognises four MENA states among top 10 improvers globally