Minister of Finance and National Economy says growth of Bahrain's non-oil economy has averaged about 7.5% per year
Bahraini government revenues have not kept pace with the growth of the kingdom’s non-oil economy, according to Sheikh Salman bin Khalifa Al Khalifa, Minister of Finance and National Economy.
Speaking at the GCC Financial Forum in Manama on Wednesday, Sheikh Salman said that non-oil economic growth in Bahrain has averaged approximately 7.5 percent per year.
“There’s a very positive story in the non-oil economic growth space,” he said. “What has been the issue is that non-oil revenues generated by the government have not kept up with that growth.”
Bahrain is currently in embarking on a plan to balance its budget by 2022, a key requirement of a $10 billion aid package funded by neighbouring states including the UAE and Saudi Arabia.
Last year, the country managed to trim its deficit by 35 percent to $3.5 billion. On Monday, Bahrain’s government approved a draft budget for the coming two years that projects a reduction of the deficit to $1.63 billion by 2020.
“As we continue on our deficit reduction measures, it will be of extreme importance that we look at the reduction of operating expenditure and an increase in revenues, non-oil revenues in particular, and that all our spending on subsidies is directed towards citizens,” Sheikh Salman said at the event.
Since VAT was introduced in Bahrain on January 1, Sheikh Salman said that more than 2,000 companies have registered already, more than two-thirds of which are below the legal threshold and have registered because of the positive incentives of refunds.
“It’s working well,” he said, noting that laws passed in Bahrain have zero-rated and exempted certain industries to ensure that citizens are protected from inflationary pressure and that economic growth continues.
Looking to the future, Sheikh Salman said he predicts that Bahrain’s logistics, tourism, financial and oil and gas sectors will continue to be the biggest drivers of economic growth.
Earlier in the week, the governor of Bahrain’s Central Bank said he expects the economy to grow at between 2.0 and 2.5 percent in 2019, similarly to last year.