Economic Development Board (EDB) in its quarterly report stressed on the importance for Bahrain to diversify its revenue base away from oil, and to manage the government debts which continued to grow over the past few years.
The EDB Bahrain Economic Quarterly report highlighted that public revenues are highly reliant on oil revenues that total more than 75% of government revenues in recent years. These oil revenues are also largely dependent on the flat production of the offshore Abu Saafa Field, and dependent on volatile oil prices that are at risk of sudden decreases, such as those seen in 2009 when revenues dropped by more than 36% with the decrease in oil prices.
Bahrain was able to achieve noticeable budget surpluses in most years of the past decade, reaching a peak in 2008 with a total of BD617 million, which constituted more than 7% of nominal GDP. These surpluses were aided largely by highly favourable oil prices that increased oil revenues by more than 135% between 2000 and 2010, while expenditure grew by 235% and total debt increased by around 227%. However, the oil prices boom of the past few years and the strong growth of Bahrain’s national output concealed deterioration in the underlying structure of Bahrain’s budget.
Public debt to GDP ratio has risen noticeably from 15% in 2008 to more than 34% in 2010. The majority of Bahrain’s debt is domestic, with foreign loans increasing over the past couple of years. Bahrain’s debt to GDP is high in comparison to the region, and this could impact its ability to borrow in the long run.
Public expenditure grew drastically over the past decade, surpassing the growth rates of both revenues and nominal GDP. The recurrent expenditure category has grown noticeably, with manpower expenditure constituting the largest portion. Project expenditure levels fluctuated between the years depending on remaining cash and ability to borrow. This could impact Bahrain’s credit rating.
Besides the Public Debt, the report also includes an overview of Bahrain’s Outlook and main Economic Indicators. There is also an overview for the Insurance Industry in Bahrain which reviews the insurance sector’s size, composition and past trends. The regular chart set of Bahrain’s economy provides a snapshot of all the main economic indicators.