Bahrain will slash spending by ministries and government agencies by 30 percent to help the country weather the coronavirus outbreak, a cabinet statement said on Monday after meeting.
The Gulf island state’s government will also reschedule some construction and consulting projects in order to keep spending within the 2020 budget and make room for other spending needs emerging as a result of the disease’s spread.
The move comes as other states in the Gulf seek to cut spending as they face fiscal pressure from virus containment measures that have brought to a near halt vital economic sectors such as tourism and transport.
Plunging oil prices and an agreement on production cuts are also expected to weigh on regional budgets this year.
The Bahraini government has agreed to “reschedule a number of construction and consulting projects to make room for more emergency spending to help with the spread of the coronavirus within the ceiling of the 2020 national budget,” the statement said on Monday.
The cabinet also issued some amendments to the labor code allowing it to rethink allowances and benefits of public sector employees, it added.
Oman has recently reduced its budgeted expenditure by over $1 billion through cuts to development and operating budgets, while Saudi Arabia - the largest Arab economy - last month cut almost 5 percent of its 2020 budget and said it would reassess expenditure according to developments in oil markets and the pandemic.
Bahrain, rated junk by all the three major credit rating agencies, last month obtained a loan of around $1 billion which it used to repay a maturing bond, sources told Reuters.
The government could post a fiscal deficit of 15.7 percent of GDP this year from a 10.6 percent deficit in 2019, according to the International Monetary Fund, while the economy could contract by 3.6 percent. The IMF expects growth to bounce back to 3 percent in 2021.