The government of Bahrain recently held a government-parliamentary meeting to discuss the public financial strategy for the coming years. MP Ahmed Al Saloum, Head of the Financial and Economic Affairs Committee in the Council of Representatives, confirmed that the meeting focused on the current state of public debt and financial balance. The government outlined financial balance programs aimed at mitigating increases in public debt and reducing accumulated deficits.
Al Saloum highlighted that the coverage ratio of public debt interest reached 21% of total revenues in 2023 and is projected to rise to 35% if the current budget remains unchanged. This increase could have a significant impact on government projects, services, and budgetary items. The government presented two options to the Council of Representatives – maintaining the existing budget, resulting in a deficit of BD6 billion, or formulating ministry budgets based on needs and efficiency to target a lower deficit in public debt management expenses of BD2 billion.
The government aims to reduce the ratio of public debt to GDP to 60% to secure Bahrain’s financial standing and lead to a desired reclassification of the Kingdom in the medium term. Currently, the public debt to GDP ratio is approximately 103% and is expected to reach 110% by year-end. MPs did not attend the meeting to present demands or discuss detailed figures, but to review achievements over the past six years and align on flexible budget items aiming for primary surpluses at the start of budget implementation.
In the coming two weeks, the government plans to present modifications to several laws to the representatives. These amendments aim to expand the framework of financial efficiency, reduce expenditures by focusing on infrastructure, and regulate spending to contribute to improved overall economic performance. The government is also considering issuing bonds to improve debt management efficiency and achieve a more sustainable financial position. Achieving the set targets would solidify Bahrain’s financial position and pave the way for positive economic growth in the future.
