BANKING & FINANCE

Bahrain budget deficit widens to $601m in 2012, below plan

Bahrain’s budget deficit widened reaching $601m in 2012, but the IMF said it needs to reform its public finances to avoid unsustainable debt burden. (File photo: AFP)

Bahrain’s budget deficit widened sevenfold in 2012 to 227 million dinars ($601m), but stayed well below an initial plan as the country reined in spending increases and revenue grew, data showed.

The 2012 deficit was much lower than the 1.33 billion dinars initially foreseen and is equivalent to 2 percent of gross domestic product, up from 0.3 percent in 2011, according to a Reuters calculation based on the official figures.

Government expenditure in the small non-OPEC oil exporter grew 14 percent to 3.26bn dinars, but that was below the 3.85bn planned, the finance ministry data showed.

Bahrain increased its original 2012 expenditure plan by nearly 19 percent in September 2011 to soften social tensions. Unrest among Shi’ite Muslim citizens began in early 2011.

Revenues grew 21 percent to 3.03bn dinars, above the 2.52bn initially projected, mainly due to a rise in oil and gas income.

Bahrain relied on output from the Abu Safa oilfield shared with Saudi Arabia for nearly 67 percent of its budget revenue in 2012, the data showed. It got 2.02bn dinars from the field, a nearly 5 percent drop on 2011.

The International Monetary Fund (IMF) said in May that Bahrain needed to reform its public finances in the medium term to avoid its debt burden becoming unsustainable.

The deficit is seen widening to as high as 8.6 percent of GDP in 2018 from 4.2 percent forecast this year, the IMF estimated.

Bahrain’s fiscal breakeven oil price reached critical levels of $115 per barrel in 2012, the IMF said, making it vulnerable to a sustained decline in crude prices.

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Last Update: Sunday, 2 June 2013 KSA 18:09 - GMT 15:09
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