On Monday, the Ministry of Finance said that Bahrain’s budget deficit amounted to 520 million dinars ($1.38 billion) in the first half of 2021, down 35 per cent compared to the same period a year ago.
The Ministry of Finance said that revenues amounted to 1.119 billion dinars in the first half of 2021, increasing 23% over the same period last year. As oil revenues jumped by 33% due to oil prices, non-oil revenues rose 4%.
Total actual expenses amounted to 1.639 billion dinars in the first half, down 4% from the same period in 2020.
According to the Ministry of Finance, the results also showed a decrease in recurring expenses by 2% compared to the same period in 2020.
Last March, Bahrain’s general budget was approved, amid a decrease in the total budget deficit by 68 million and 153 thousand dinars (180 million dollars) in 2021, and by 33 million and 936 thousand dinars (90 million) in 2022, with a total of 102 million and 89 thousand dinars (270 million dinars), according to the local newspaper Al-Watan.
Bahrain is considered the least productive in terms of oil resources among the countries of the Gulf Cooperation Council, and it produces about 200,000 barrels of crude oil per day.
Because of the impact of the Bahraini economy, the Manama government approved a financial stimulus package worth 4.3 billion dinars (11.4 billion dollars) to support the economy to face the repercussions of the pandemic.
And at the end of last June, the International Monetary Fund said that Bahrain should do more to reset its financial positions, even if it managed to gather additional regional support.
Ali Al-Eid, head of the IMF mission in Bahrain, said in an interview with Bloomberg that once Bahrain recovers from the economic downturn caused by the coronavirus pandemic, it is likely that the island nation will need to “make urgent fiscal reforms.”
Al-Eid added: “Whether it depends on the support of the Gulf Cooperation Council, which may or may not help facilitate this amendment, but the amendment is still the basis.”
The smallest Gulf state was cash-strapped even before the pandemic, as it had to bolster its finances with a $10 billion bailout package from its wealthier neighbours in 2018.
Bloomberg International News Agency confirmed that the Kingdom of Bahrain still needs someone to disengage it from its unfortunate economic reality and in light of its fragile financial situation.
The agency said that most Gulf Cooperation Council countries are working to reinject life’s blood into their coffers thanks to the gains recorded by successive oil price hikes. The smallest economy in the region, the Bahraini economy, still needs someone to help and rescue it.
It indicated in a report seen by Bahraini Leaks that the financial breakeven price of oil for Bahrain must exceed $88 a barrel to balance its budget this year, according to the vision of the International Monetary Fund.
This is the highest breakeven rate in the six Gulf Cooperation Council countries and above the current $75.
Bahrain is preparing at present to enter the international debt markets in the coming months to finance a deficit that is still rising in the wake of the Corona pandemic and made it lag behind its neighbours in the region, which is considered the largest in terms of energy exports to the world.
Bloomberg quoted Scott Livermore, chief Middle East economist at Oxford Economics in Dubai, as saying: “Bahrain needs an ambitious reform aimed at addressing the large financial imbalances in its budget.”
However, he added, “But it seems that there is a lack of political will in this regard at the present time.”
The unemployment crisis in the Bahraini markets has deepened, due to the outbreak of the Coronavirus and its disruption of the economic wheel in the country, amid the absence of government solutions.
The situation is made more difficult because the country’s economic indicators are witnessing a continuous decline, as prolonged government restrictions have caused the closure of dozens of commercial establishments and the layoff of thousands of workers, leaving them prey to unemployment.