DUBAI Jan 30 Bahrain plans austerity steps to
cut its budget deficit in line with IMF recommendations, its
finance minister said on Saturday in comments that could help
the island kingdom sell its bonds when it returns to
international markets later this year.
Bahrain is one of several Gulf Arab oil states using the
IMF's assistance to plan economic reforms as low crude prices
put heavy pressure on state finances. The IMF is also providing
valuable political cover for the painful reforms.
The kingdom is expected to return to bond markets this year
to help finance its budget deficit, which is estimated by the
International Monetary Fund at about 15 percent of gross
domestic product this year.
Finance Minister Sheikh Ahmed bin Mohammed al-Khalifa said
the IMF's latest country recommendations "echo Bahrain's current
fiscal action plan."
"Bahrain's Government Action Plan, currently underway,
includes wide-ranging measures that will ensure the
sustainability of Bahrain's financial resources and development,
benefiting the entire country," he said in a statement quoted by
the official BNA news agency.
On Friday, the IMF urged Bahrain to take "sizeable" steps to
reduce its budget deficit, saying it could introduce a
value-added tax being planned by Gulf states, cut spending on
social transfers and freeze public-sector wages.
Sheikh Ahmed said Bahrain aimed to balance its budget
"within three budgetary cycles". Bahrain drafts its budget plans
in two-year periods, implying the kingdom would eliminate its
deficit within six years.
Bahrain's budget plan for 2015 and 2016 envisaged a deficit
of about 1.505 billion dinars ($4.0 billion). Austerity steps
already taken include removing domestic price subsidies for meat
and cutting them for gasoline.
The kingdom's plan is aimed at "continuing the longstanding
diversification of Bahrain's economy by increasing non-oil
revenues, redirecting subsidies to Bahraini citizens, and
reducing recurrent expenditure by restructuring government
departments," Sheikh Ahmed said without giving details.
Bahrain is trying to boost revenues from tourism, light
manufacturing and services industries to reduce its heavy
reliance on oil exports.
(Reporting by Andrew Torchia; Editing by Clelia Oziel)