Bahrain lifts meat prices as cheap oil hits state finances

MANAMA, Oct 1 (Reuters) - Bahrain more than doubled the prices of beef and chicken on Thursday, removing meat subsidies in a politically sensitive move designed to save money as low oil prices slash the government’s revenues.

Like other Gulf oil-exporting states, Bahrain has for many years subsidised goods and services such as meat, fuel, electricity and water, keeping prices ultra-low in an effort to maintain social peace.

But since its oil income began to plunge last year, the subsidies have become much harder for the government to afford.

Bahraini citizens - but not foreigners, who comprise about half the population of roughly 1.3 million - will be at least partially compensated with cash handouts from the government.

Nevertheless, the reform proved very controversial and ran up against opposition in parliament. The government originally announced in August that it would remove meat subsidies from Sept. 1, but then delayed implementation by a month as it consulted lawmakers and advisers.

Local media quoted officials as saying the reform was expected to save the government about 22-29 million dinars ($58-77 million) annually - a small amount compared to a state budget deficit projected at 1.50 billion dinars this year.

The government is also considering cuts to a range of other subsidies, though it has not yet announced a concrete plan.

Customers for meat were largely absent from two major markets in the cities of Manama and Muharraq on Thursday. Sayed Majeed al-Hulaibi, who runs a meat shop in Manama, said some consumers seemed to be boycotting meat in an effort to push prices back down.

Bahrain is under more financial pressure than most of the Gulf Arab states, which are much richer, but the other governments have also started to reduce subsidies or are considering how to do so. In August, the United Arab Emirates made the biggest reform to date, cutting subsidies for domestic sales of gasoline. (Reporting by Nazeeha Saeed, Writing by Sami Aboudi and Andrew Torchia; Editing by Mark Trevelyan)