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Thu 10 Nov 2016 02:54 PM

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Bahrain watchdog warns over rise in budget deficit

Deficit rose 106 percent rise in four years to $19bn by end of 2015

Bahrain watchdog warns over rise in budget deficit
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The Administrative and Financial Audit Bureau has warned Bahrain over its rising national budget deficit, blaming five of its government bodies for sharp increase, according to a new report.

The gulf state’s deficit had reached $19bn (BD7.2bn) by the end of 2015 in comparison to $9.3b (BD3.5b) in 2011, marking a 106 per cent rise in the short span of four years.

The bureau said the highest spenders on projects were the Health and Works, Municipalities Affairs and Urban Planning Ministries with 53 percent of their projects budget spent. The lowest was the justice branch of the Justice, Islamic Affairs and Endowment Ministry at 11 per cent.

The report also revealed the debit made up 33 percent of GDP in 2011 but rose to 60 percent in 2015.

“We are concerned with the deficit level and see it will take a toll with negative implications for the financial and credit status (of Bahrain). The government resorted to borrowing to repay what it previously borrowed, besides other financial obligations, instead of spending it on funding development projects and programmes,” the bureau said.

“Between 71% to 95% of issued bonds over the past five years went to repay loan instalments, which threatens the government’s commitment to fulfil its obligations in future and achieve its intended targets. There is no law tackling the management of the country’s deficit or controlling borrowing, with no maximum limit identified or considered to be acceptable,” it explained.

The bureau highlighted a $220m (BD83m) overspend by government ministries compared to an $87m (BD33m) overspend in 2014.