Bahrain’s defence, new labour legislation and debt

Amidst oil prices that are inexorably falling and / or not getting back to where they were before, the authorities had promptly voiced their intention to phasing out some subsidies on fuel, electricity and water, with however direct cash handouts to Bahraini citizens for purposes of softening any socio-political backlash. Meanwhile they proceeded earlier this year, to cut subsidies on meat early last month as part of efforts to economise on spending.

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Infrastructure projects and debt in Bahrain

Manama Trade Centre
Manama Trade Centre

Back in September, Bahrain’s King Hamad Al Khalifa issued a decree to form a smaller cabinet to focus on the country’s fiscal difficulties, but state media did not to date provide any details.

Amidst oil prices that are inexorably falling and / or not getting back to where they were before, the authorities had promptly voiced their intention to phasing out some subsidies on fuel, electricity and water, with however direct cash handouts to Bahraini citizens for purposes of softening any socio-political backlash.  Meanwhile they proceeded earlier this year, to cut subsidies on meat early last month as part of efforts to economise on spending.  .

The country’s capital spending however is expected to go down by 19.5% in 2015, from last year’s budget, but is expected to go up by 4.5% in 2016.  However, overall expenditure is expected to drop by 2.9% in 2015 and increase by 2.2% in 2016.

As forecast by most experts, Bahrain will have to issue additional debt so as to reduce resorting to its reserves for its infrastructure projects.  Debt, consequently is expected to come near to 54% in 2015 and beyond up to 57% in 2016.  Bahrain’s gross debt has arisen from just under 30% of GDP in 2010 to 43.8% in 2014 and could remain the highest in the GCC.

Despite the fact that the country having much smaller financial and oil reserves than any of the Gulf countries, and far deeper political tensions that eroded investor confidence, growth went up early this year primarily on the back of improved performance from the construction, tourism and transportation sectors.

According to a Bahrain based international real estate consultant’s report, the office property market has registered some growth this year, thanks to the resumption in activity of multinationals, which now account for approximately 25 % of office space deals in the kingdom.

This is, according to the report is due as a direct result of the widespread re-emergence of social stability across Bahrain.  The country was voted the fourth best country for expats to live world-wide, and the top destination among Gulf Countries by a major bank.

The construction of the British marine facilities headquarters in the kingdom could not fall at a better time.  These according to officials of both parties, not only reflected the UK’s commitment towards Bahrain and the region in general, but will strengthen and eventually reflect on improved regional security and peace as well as boost growth further.

More recently, Bahrain has approved a new labour law that is meant to facilitate movement of all employees notably that of the dominating expatriate manpower.

The law in effect, will allow expatriate workers employment to be interrupted ahead of locals if the business is facing financial difficulties or undergoing restructuring.

 

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