Expats to feel pinch as Bahrain plans to cut subsidies

MANAMA: Bahrain will begin cutting subsidies for goods and services to reduce state spending on its foreign population as low oil prices pressure its budget, a top official said.
Bahraini citizens will receive cash payments from the state to offset price rise when subsidies are removed, said Minister of State for Information Affairs Isa bin Abdulrahman Al-Hammadi. Foreign citizens would not receive such payments.
“The majority of beneficiaries from subsidy of consumer goods and services are expats and companies but not Bahraini citizens,” the BNA quoted him as saying.
The government will therefore redirect subsidy policies to benefit local citizens only, Hammadi said.
Like other GCC countries, Bahrain employs many foreign workers; about half of its population of roughly 1.3 million is estimated to be expatriate. They benefit from state subsidies, which keep down prices of fuel, meat, electricity, water and other items.
Paying for the subsidies has become increasingly difficult for Bahrain, which is less wealthy than its neighbors, as oil prices have plunged since last year.
He did not give a specific timetable for subsidy cuts or say how big they might be. The subsidy for meat, which costs 47 million dinars, may be the first to be removed, but it is small compared to electricity and water subsidies, he said.
Subsidy cuts could push up consumer prices in Bahrain and put upward pressure on foreign workers’ wages, potentially hurting companies’ competitiveness