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Bahrain: Action plan to boost growth

Bahrain - The government has come up with a 12-point plan to achieve budget surplus and boost the country’s financial stability.

A Cabinet delegation led by Finance and National Economy Minister Shaikh Salman bin Khalifa Al Khalifa presented an initial draft of the 2025-2026 national budget to legislators during a high-profile meeting yesterday.

It was held at the National Assembly headquarters in Gudaibiya.The parliamentary delegation was chaired by National Assembly and Parliament Speaker Ahmed Al Musallam and the Shura Council team by Chairman Ali Saleh Al Saleh.

The plan proposes taxes on local corporate profits and potential adjustments to value-added-tax to boost income.Shaikh Salman said the 2025-2026 budget would outline the next phase of Bahrain’s economic vision.“It focuses on enhancing government services, ensuring economic growth, and improving living standards while maintaining financial discipline,” he added.

The 12-point plan:

1. Enhancing the efficiency of public expenditures: Implementing stricter financial controls to optimise spending.

2. Adjusting commercial natural gas prices: Revising gas prices for businesses while maintaining stability for consumers.

3. Liberalising fuel, electricity, and water prices while maintaining subsidies for citizens: A gradual transition towards market-based pricing, with continued support for Bahraini households.

4. Introducing carbon emission fees: A new environmental levy to encourage sustainable practices.

5. Imposing taxes on local corporate profits: A corporate tax framework to diversify government revenue.

6. Increasing VAT revenue: Potential adjustments to value-added tax policies to boost income. VAT is currently 10 per cent of the total value.

7. Expanding selective (sin) taxes on unhealthy foods: Additional levies on products that pose health risks.

8. Raising existing selective tax rates: Reviewing and adjusting current tax brackets for energy drinks and tobacco products (currently 100pc) and soft drinks (currently 50pc).

9. Introducing infrastructure sustainability fees: Charges aimed at maintaining and upgrading national infrastructure.

10. Implementing mandatory health insurance and introducing a fee for expatriates: A structured approach to healthcare funding.

11. Introducing wastewater fees, excluding citizens’ primary residences: A charge on non-residential wastewater services.

12. Rolling out revenue-generating initiatives and reducing debt servicing costs: Measures to cut financial obligations and generate alternative income sources.

Mr Al Musallam reaffirmed Parliament’s commitment to implementing the directives of His Majesty King Hamad and passing the 2025-2026 budget law to achieve national objectives.

He expressed gratitude to His Royal Highness Prince Salman bin Hamad Al Khalifa, Crown Prince and Prime Minister, for his support and commitment to collaborating with the legislature.“The ongoing consultation between the government and the assembly on the state budget reflects a shared commitment to fostering economic growth, maintaining financial stability, and creating opportunities for Bahraini citizens,” Mr Al Musallam said.

Meanwhile, Mr Al Saleh stressed the importance of sustained co-operation between both branches to ensure Bahrain’s continued progress.“Through our joint efforts, we aim to develop a budget that balances financial sustainability with the needs of citizens,” he said. “It is crucial to adopt policies that support economic growth while safeguarding Bahrain’s social and financial well-being.”

Parliament financial and economic affairs committee chairman MP Ahmed Al Salloom confirmed that the proposals ‘are still under review’, stressing the need for further discussions before reaching a final agreement.

“The discussions are ongoing, and every point of the 12 proposals is subject to consensus,” Mr Al Salloom said. “Collectively, the 12 measures will end the BD3.8 billion budget deficit for both years and allow a surplus of BD25m by the end of 2026.”

He also revealed that joint meetings will continue every Sunday and Wednesday until agreements are reached. “There are key legislative changes that must be addressed before finalising the budget,” he explained.

“For example, taxation requires a legal framework, and wastewater fees need updated regulations. These structural adjustments are crucial for a balanced and sustainable financial plan.”Ministers, deputy speakers from both chambers, and members of the financial and economic committees of Parliament and Shura were also present at the meeting.