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Fri 8 Jul 2011 10:21 AM

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Bahrain's budget deficit widened to $1.2bn in 2010

Lower oil prices take their toll on economy of Gulf kingdom, according to finance ministry data

Bahrain's budget deficit widened to $1.2bn in 2010
Bahrains central bank building.

Bahrain's budget deficit widened to BD459.7 million ($1.2 billion) in 2010 from 446 million in 2009 as lower oil prices took their toll, finance ministry data has showed.

The small non-OPEC oil producer, whose economy was hit by its worst unrest since the 1990s earlier this year, needs oil prices of around $100 per barrel to balance its budget.

US benchmark crude prices floated between $65 and $115 per barrel last year.

As a percent of gross domestic product, the deficit narrowed slightly to around 5.6 percent down from a 6.0 percent in 2009, according to Reuters calculations.

Analysts polled by Reuters expected a deficit of 0.7 percent of gross domestic product in 2010 and 1.4 percent in 2011.

Revenue reached BD2.18 billion, well above planned 1.46 billion, as income from crude and natural gas exports was nearly 65 percent higher than expected, the data showed. Hydrocarbons accounted for 85 percent of Bahrain's budget revenue.

The Gulf Arab country's expenditures reached 2.64 billion dinars, below budgeted 3.07 billion, the data showed.

The small island kingdom was thrown into turmoil in February when citizens, mostly majority Shi'ites, took to the streets demanding democratic reforms in the Sunni-ruled state.

The protests were put down in March in a government crackdown that called in troops and police from neighbouring Arab countries.

In May, Bahrain's parliament approved a 44 percent rise in government spending in 2011-2012 compared to the previous two-year period.

Robust oil prices are seen alleviating some of the spending pressure this year. However, Bahrain is the only Gulf state projected to see a budget deficit in 2011 .

Bahrain's central bank is expecting the economy to grow by 3 percent in 2011.

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