On Sunday, 31st October 2021, Bahrain released details of new economic growth and fiscal balance plan that delays the zero deficit target by two years to 2024 from 2022 and increases the Value added tax to 10% from 5%. The plan aims at supporting post covid economic recovery and promoting the country’s long term business competitiveness.
“This comprehensive economic and fiscal plan is an investment in our nation’s people, our businesses, and the future of Bahrain,” highlighted the Minister of Finance and National Economy Shaikh Salman bin Khalifa Al Khalifa.
The newly announced economic growth plan is in alignment with Bahrain’s Economic Vision 2030 and the country’s aim to achieve net-zero by 2060 and focuses on five main strategies as under.
Implementing a Regulatory Reform Package that would help attract USD 2.5 billion of Foreign Direct Investment by 2023 and includes simplification of licensing procedures and approvals for doing business in Bahrain; launching of a new Government Land Bank; displaying investment opportunities on an online portal; simplifying urban planning related services through digitisation; initiating a new residency permit program for attracting investors and talents into the Kingdom.
Rolling out a new labour market reform plan for generating 20,000 jobs for locals and training 10,000 Bahraini citizens till 2024. The new plan will focus on a long term national labour market strategy, a new ‘Tamkeen Strategy’ for promoting private sectors, reviewing labour fees and continual upskilling of the country’s workforce.
Introducing a Priority Sectors Plan for implementing six new sector strategies in oil and gas; logistics, tourism, financial services; telecommunications, IT and digital economy; and the manufacturing sector and ensuring annual growth rate of 5% in the non-oil sector by 2022.
Implementing a strategic projects plan for creating new industrial investment locations across the country and mobilizing more than USD 30 billion investments in strategic projects.
Updating the Fiscal Balance Program by incorporating eight new fiscal reform workstreams including reduction of recurrent non-manpower expenditure; reduction of project spending; reduction of manpower expenditure; streamlining of distribution of cash subsidies to citizens; increased annual contributions of Government-owned entities; adjustment of commodities prices as well as prices of services provided to companies; introduction of new initiatives for Government services revenue; and increase in VAT to 10%. The updated program aims to balance the national budget by 2024 against the pre-COVID 19 targets of 2022.
The Minister of Finance and National Economy also emphasized saying “The plan is also a concrete statement of our intent to secure a balanced budget by 2024 and provide long-term fiscal sustainability, with eight new spending and revenue initiatives complementing our broader economic competitiveness enhancements.”
In recent years, Bahrain’s government has launched several initiatives and programs that have significantly contributed to ongoing economic development and promotion of foreign investment into the Kingdom’s economy through new company formation in Bahrain in non-oil sectors.
