September 2, 2015 / 8:01 AM / 3 years ago

Bahrain postpones plan to remove meat subsidies

DUBAI, Sept 2 (Reuters) - Bahrain has postponed by one month a controversial plan to remove government subsidies on meat, in a sign of the political obstacles that Gulf Arab governments face as they try to reduce social handouts to save money.

The plan, which had been due to take effect on Sept. 1, will now be delayed until October on the orders of Prime Minister Sheikh Khalifa bin Salman al-Khalifa, state news agency BNA reported late on Tuesday.

A joint committee involving the cabinet and parliament will use the additional time to study data and “discuss all the plausible alternatives and options” related to meat subsidies, BNA added, without giving details of the debate.

Like other Gulf Arab oil exporters, Bahrain subsidises goods and utilities including meat, fuel, electricity and water, keeping prices ultra-low to buy social peace.

But since oil prices plunged last year, slashing state revenues, the subsidies have become increasingly hard for governments to afford - especially in Bahrain, which has smaller oil and financial reserves than its neighbours.

So the government announced last month that it would remove subsidies on meat from Sept. 1, allowing domestic prices to rise and compensating Bahraini citizens - but not foreigners, who comprise about half of the population of roughly 1.3 million - with cash payments.

Efforts to cut subsidies have run up against opposition in parliament, however, contributing to a six-month delay in passage of this year’s state budget. To break the impasse, the cabinet agreed to consult legislators on subsidy plans.

Bahrain has been examining a range of money-saving measures and the removal of subsidies from meat could eventually be followed by similar action for other goods and services.

Other Gulf states have also started to reduce subsidies or are considering how to do so. In the biggest reform to date, the United Arab Emirates cut subsidies for domestic sales of gasoline last month.

Sunni Muslim-led Bahrain, which hosts the U.S. Fifth Fleet, has experienced sporadic turmoil since mass protests in 2011 led by majority Shi’ites demanding reforms and a bigger role in government. (Reporting by Andrew Torchia; Editing by Kevin Liffey)

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