DUBAI (Reuters): Bahrain’s government has rejected parliament’s proposals to reform allowances paid to Bahrainis squeezed by years of austerity on the grounds that they would break government spending caps, lawmakers said.
After oil prices fell in 2014, pressuring state finances, Bahrain cut subsidies and raised taxes and fees to control its deficit. But the austerity has angered some Bahrainis and prompted a backlash in parliament.
Bahrain, which lacks the ample oil reserves of fellow Gulf states, has held off on fresh austerity measures, such as the introduction of value-added tax, until parliament agrees on a new system to compensate low- and middle-income citizens for increases in the cost of living.
The proposal submitted by parliament would have required an increase in government spending at a time when Bahrain is struggling with a current account gap and a large deficit, which have dragged down prices of its bonds and weighed on the dinar.
“The government has indeed asked us to review our proposal,” Jamal Fakhrou, the head of parliament’s technical commission in charge of the reform, told Reuters.
He said the government had explained it did not plan to raise direct cash allocations for subsidies in the next two years above the 382 million dinars ($1.01 billion) budgeted for 2018.
Another member of the House of Representatives, who declined to be named, said government officials were concerned that the proposal did not take into account a growing population, which would mean the cost of the program would rise in future years.
The new subsidies proposal, published by parliament earlier this month, recommends including meat subsidies and a cost of living allowance in a single package and increasing the size of that package for both working and retired Bahrainis.
It would provide 150 dinars for Bahrainis earning less than 300 dinars a month — up from 100 dinars in the old system — 100 dinars for those earning up to 700, and 75 dinars for those earning up to 1,000, officials said.
The proposal also included an additional allowance of 50 dinars for citizens earning between 1,001 and 1,200 dinars.
Some lawmakers said it could be difficult to reach agreement on a revised system that would satisfy both sides.
“One side will have to give concessions because the ultimate goal is to serve the citizens,” Fakhrou said.
Bahrain government rejects parliament’s subsidy reform plan
Bahrain government rejects parliament’s subsidy reform plan
- The new subsidies proposal, published by parliament earlier this month, recommends including meat subsidies and a cost of living allowance in a single package
- Bahrain, which lacks the ample oil reserves of fellow Gulf states, has held off on fresh austerity measures
Free trade negotiations between GCC, India mark new phase of partnership, says sec-gen
RIYADH: The Gulf Cooperation Council’s secretary-general affirmed that the negotiations for a free trade agreement between the GCC and India, and the signing of the joint statement, represents a new phase of strategic partnership.
Jasem Mohamed Al-Budaiwi said that this contributes to enhancing close cooperation and strengthening economic and trade ties, according to the Saudi Press Agency.
This came during the signing ceremony of the joint statement on launching the free trade agreement negotiations between the Al-Budaiwi and India’s Minister of Commerce and Industry, Piyush Goyal, which took place in New Delhi, on Tuesday.
During the signing ceremony, Al-Budaiwi said that the Terms of Reference, signed on Feb. 5, provide a comprehensive and clear framework for these negotiations. The two nations agreed to discuss enhancing cooperation in vital strategic areas, including trade in goods, customs procedures, and services.
Additionally, the framework covers Sanitary and Phytosanitary measures, intellectual property rights, cooperation on Micro, Small, and Medium Enterprises, along with other topics of mutual interest. This reflects the comprehensive nature of the agreement and its ability to keep pace with the future economy.
Al-Budaiwi expressed hope that these negotiations would lead to a comprehensive and ambitious free trade agreement that works to remove customs and non-customs barriers, enhance the flow of quality investments in both directions, and achieve further liberalization in trade and investment cooperation between the GCC and India for mutual benefit.
This would provide a stimulating economic environment and an investment climate that opens broad horizons for the business sector, supports supply chains, and accelerates the pace of economic growth in line with the ambitious developmental visions of the GCC states.
The top official affirmed the full readiness of the General Secretariat to host the first round of negotiations at its headquarters in Riyadh during the second half of this year.
The two sides held a meeting during which they reviewed the existing cooperation relations between the GCC and India and discussed ways to develop and elevate them to broader horizons, serving mutual interests and enhancing opportunities for strategic partnership between the two sides, particularly in the economic, investment, and trade fields.
They praised the role undertaken by the negotiating teams from both sides, appreciating the efforts contributing to reaching a comprehensive agreement that enhances economic integration and supports the smooth flow of trade between the two nations.
