MPs want to exclude all foreigners and wealthy Bahrainis from government subsidies – meaning more than half the country faces the prospect of a surge in fuel, power, water and flour prices.
Negotiations to come up with a restructured subsidy system and welfare programme are due to commence between parliament and the government next week.
Parliament’s general-secretariat office, led by chairman Ahmed Al Mulla, yesterday held an urgent meeting to prepare for the crunch talks.
The Cabinet on Monday announced plans to restructure government subsidies so they target low and middle-income households.
Bahrain budgeted to spend a total of BD621 million on subsidies last year and another BD545m this year, although the 2018 figure is likely to be lower due to the shock decision on Monday to reduce the petrol subsidy and raise prices at the pumps.
In addition to the subsidy, Bahrain also spent BD382.5m last year on social welfare programmes.
However, authorities are looking to shake up the subsidy system as part of efforts to reduce government spending, balance the budget and tackle rising public debt.
Parliament financial and economic affairs committee chairman Abdulrahman Buali argued that it was unfair to expect the government to continue subsidising services for foreigners.
“Expatriates in Bahrain have been benefiting from low-cost living here because all of their basic needs were much cheaper than in their home countries, or anywhere else in the world,” claimed Mr Buali.
“Financial aid in its current form means that expatriates are getting similar treatment as Bahrainis, but that shouldn’t be the case.
“The new mechanisms will certainly fully exclude foreigners (from subsidies).”
He said the new system could involve lifting all subsidies completely and compensating Bahrainis, similar to an agreement reached in 2015 over meat subsidies.
“All commodities – whether fuel, flour, electricity and water – are on the table and it will be left to negotiations to determine what Bahrainis receive as financial aid,” he added.
“We don’t want an agreement to axe subsidies and then find out the payment to Bahrainis is peanuts, similar to what happened with meat.
“The idea is that we formalise the new law through a consensus with the government and have it approved by parliament, the Shura Council and the Cabinet by early next month.”
MPs and Shura Council members have been asked to submit their ideas for the subsidy shake-up to Mr Al Mulla, who hopes the issue will be resolved within a month.
He is set to have an urgent meeting with Shura Council chairman Ali Saleh Al Saleh to form the team that will negotiate with a high-level Cabinet delegation, with help from specially appointed support staff.
In a statement yesterday Mr Al Mulla confirmed that parliament would seek to exclude expats from all subsidies.
“The deal we are seeking is for Bahrainis in the low and middle range, but again we want fair financial compensation or payments,” said parliament legislative and legal affairs committee chairman Shaikh Majid Al Majid.
“It is not like a kilogramme of flour would cost 500 fils from 100 fils without the difference being calculated and redirected to Bahrainis.
“They (Bahrainis) wouldn’t feel the four-fold increase.
“But nothing is solid and we don’t know if fuel payments will be considered, but we will pressure to have them.”
Talk of a subsidy overhaul comes on the back of a new excise duty introduced on more than 900 items on December 30,
This is in addition to the expected implementation of Value Added Tax (VAT) this year.
Meanwhile, electricity and water rates are already set to rise for expats, the private sector and Bahrainis with more than one home on March 1 as part of a phased increase, which will see them rise again on March 1 next year.