Bahrain: Focus on boosting revenues

Bahrain is considering doubling its 10% value added tax to reduce its budget deficit and boost state revenues. According to parliamentary sources quoted in local and international media, amending the law on 5% VAT, which Bahrain introduced in 2019 as part of plans to fix its finances and increase non-oil revenues, is currently being discussed between the government and parliament. As parliament works to approve the law, policymakers are looking at ways to protect people with low incomes should the change be made according to the sources. Bahrain raised BHD 250m from VAT at 5% in 2019, but this declined to an estimated BHD 220mn in 2020 due the pandemic.  We have revised our 2022 budget deficit forecast down by 1.5pp to -4.0% of GDP on the assumption that parliament will approve the increase in the VAT rate to 10%.

Bahrain’s COVID-19 dynamics continue to improve, with one measure ranking it as second globally for its coronavirus response and recovery in September. In Nikkei's COVID-19 Recovery Index, Bahrain scored 72%, only one point behind Malta, the top scorer, and ahead of the UAE (71%) and Saudi Arabia (70.5%). The index ranks 121 countries and regions based on infection management, vaccine rollouts and social mobility, with a higher ranking indicating faster recovery.

Improving Covid-19 picture in Bahrain.

• # Bahrain
• # GCC
• # MENA
• # Mena Quarterly

Written By

Emirates NBD Research Research Analyst