Bahrain is making good progress on its fiscal consolidation plan and is on track to eliminate its deficit by 2022 as planned, Finance Minister Sheikh Salman bin Khalifa Al Khalifa said on Saturday.
Bahrain, which does not have the vast oil wealth of fellow Gulf states, was hit hard by the 2014 slump in crude prices. The kingdom released a plan last year to overhaul its economy and fix its debt-burdened finances, aided by a $10 billion aid package from Saudi Arabia, Kuwait and the United Arab Emirates.
“We’ve had very good execution so far,” al Klalifa told Reuters, when asked if Bahrain would meet its target. “We’ve been very disciplined with regards to executing the fiscal balance plan and ensuring that we’re executing with regards to the targets.”
Al Khalifa said Bahrain had reduced its deficit by 37.8% in the first six months of 2019, while increasing non-oil revenue by 47%. It also cut administrative costs by 14% and had 18% of civil servants accept voluntary retirement packages, he said.
It was critical to ensure job creation, and spending on health, education and other social services spending remained strong as Bahrain continued its consolidation program, he said.
Al Khalifa said a September bond issue, the country’s first since the fiscal balance plan was launched, sparked good demand and with much tighter pricing than its previous bond issue.
He gave no details on borrowing plans for the coming year, but said half of borrowing needs would be met by the aid package from Saudi Arabia, UAE and Kuwait, and a half from the market.
As well as introducing a value-added tax in January, the government has cut subsidies, raised fees and is pushing economic diversification and inward investment.