DUBAI: Bahrain’s state budget deficit nearly doubled to BD410m ($1.1bn) in 2013 but was only a fraction of the original projection as spending rose at its slowest rate since 2009, finance ministry data showed on Monday.
The small oil exporter faces tough choices between boosting state expenditure to sooth simmering political unrest and keeping its fragile public finances sustainable.
The 2013 budget shortfall widened to 3.3 percent of gross domestic product, the highest level since 2010, from two percent, or BD226.6m, in 2012, Reuters calculations based on the official data showed.
However, the deficit was well below the ministry’s original plan for a BD1.1bn gap and the International Monetary Fund’s latest forecast for a deficit of 4.4 percent of GDP.
State spending rose by a mere 2.8 percent to BD3.4bn in 2013, the slowest rate of increase since 2009; it was some 14 percent below the budget plan, mainly because of much lower expenditure on development projects.
Spending on projects plunged 35 percent to BD477m and was nearly 44 percent below the initial plan. By contrast, recurring expenditure on areas such as staff costs and services rose 14 percent to BD2.9bn, the consolidated final account showed.
Meanwhile, revenue fell 3.0 percent to BD2.9bn in 2013, coming in slightly above the government’s expectation of BD2.8bn, with oil and gas receipts bringing in 88 percent of the total.
Pressure on Bahrain’s state finances grew because it boosted its annual budget expenditure by nearly 24 percent between 2010 and 2012 after protesters, inspired by revolts elsewhere in the Arab world, took to the streets of Manama in early 2011 demanding political reforms.
The International Monetary Fund warned Bahrain last year that the kingdom needed to reform its public finances in the medium term to avoid its debt burden becoming unsustainable.