Font Size

- Aa +

Fri 1 Jul 2011 03:21 PM

Font Size

- Aa +

Bahrain cenbank sees 3% economic growth in 2011

Governor says kingdom has no plans to change interest rates which are in line with economic activity

Bahrain cenbank sees 3% economic growth in 2011
Central Bank of Bahrain governor Rasheed Al Maraj

Bahrain expects its economy to grow by three percent in 2011 and recent unrest has not prompted international banks to leave the Gulf state, its central bank governor quoted as saying on Friday.

The kingdom has no plans to change its interest rates which are in line with economic activity, the state news agency BNA reported Rasheed Al Maraj as saying.

Maraj said there was no truth to "rumours" that international banks had left after the "recent regrettable events."

"The (central) bank has issued eight licenses (for new financial institutions) since the beginning of the year and we deal with any request that meets the required conditions without delay," Maraj said.

At least two dozen people were killed including protesters and security personnel and hundreds were arrested during the unrest, which started in February.

Bahrain's Sunni rulers said the unrest was mostly the work of Shi'ite protesters pushing a sectarian agenda, backed by Shi'ite Iran.

Analysts in a Reuters poll slashed Bahrain's 2011 growth outlook in June for the second time in a row, to a median 2.7 percent from 3.4 percent following its worst civil unrest since the 1990s, making the non-OPEC oil producer the worst performer in the region.

Bahrain is the only Gulf state projected to see a budget deficit in 2011 - unchanged from the previous forecast at 1.4 percent of GDP, the poll showed.

Maraj said that the central bank's reserves of gold and hard currencies rose 11.5 percent to BD1.70 billion ($4.5 billion) at the end of April from BD1.53 billion at the end of March.

Earlier in June, King Hamad bin Isa al-Khalifa approved a $16.44 billion budget for the next two years -- a 44 percent rise in spending on subsidies and other public expenditures.

Bahrain has set its repo rate and one-week deposit rate at 2.25 percent and 0.50 percent respectively, which were last cut in September 2009.