Bahrain to cut government spending by 30%

By Backend Office, Desk Reporter
    Bahrain

    Bahrain will slash spending by ministries and government agencies by 30% to help the country tackle the coronavirus outbreak, a cabinet statement said on Monday after meeting.

    The Gulf island state’s government will also reschedule some construction and consulting projects in order to keep spending within the 2020 budget and make room for other spending needs emerging as a result of the disease’s spread.

    The move comes as other states in the Gulf seek to cut spending as they face fiscal pressure from virus containment measures that have brought to a near halt vital economic sectors such as tourism and transport.

    Plunging oil prices and an agreement on production cuts are also expected to weigh on regional budgets this year.

    The Bahraini government has agreed to “reschedule numerous construction and consulting projects to make room for more emergency spending to help with the spread of the coronavirus within the ceiling of the 2020 national budget,” the statement said on Monday.

    The cabinet also issued some amendments to the labor code allowing it to rethink allowances and benefits of public sector employees, it added.

    Bahrain, rated low by all the three major credit rating agencies, last month obtained a loan of around $1 billion which is used to repay a maturing bond.

    The government could post a fiscal deficit of 15.7% of GDP this year from a 10.6% deficit in 2019, according to the International Monetary Fund, while the economy could contract by 3.6%. The IMF expects growth to bounce back to 3% in 2021.

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