Bahrain Mirror - Reuters: Bahrain's cabinet has approved a draft budget for 2017 and 2018 that projects only slow progress in cutting the country's budget deficit, which has been swollen by low oil prices and is very large compared to the size of the economy.

The draft budget for the two-year period was delayed for several months by the difficulty of balancing fiscal reforms with political pressure for welfare spending and the need to invest to support economic growth.

This week's approval by the cabinet means the budget will now be reviewed by parliament, which in the past has sometimes challenged the cabinet over austerity measures which it sees as excessive.

State revenues in 2017 are estimated at 2.2 billion dinars ($5.8 billion), of which 1.7 billion dinars are oil revenues. Public spending is projected at 3.5 billion dinars, leaving a 1.3 billion dinar deficit, according to state news agency BNA.

For 2018, revenues are estimated at 2.3 billion dinars, including 1.8 billion dinars from oil, with spending at 3.5 billion dinars - a deficit of 1.2 billion dinars. The budget assumes an average oil price of $55 a barrel.

The government ran an actual budget deficit of 1.5 billion dinars in 2016, finance ministry data shows, or 12.5 percent of the International Monetary Fund's estimate of gross domestic product that year. Actual oil revenues were 1.9 billion dinars.

Bahrain's state finances are among the weakest in the six-nation Gulf Cooperation Council because it lacks the huge oil and fiscal reserves of its neighbours. But it is a close ally of Saudi Arabia and most investors believe Riyadh would help to bail it out in the face of any financial crisis.

Arabic Version