Public Debt Reaches 106%: Why is Finance Ministry Hiding these Numbers?
2019-10-29 - 5:47 p
Bahrain Mirror (Exclusive): Why doesn't the Finance Ministry present transparent data on the public debt? Why did it reveal a number less than the actual one last year? How did the government exceed the legal debt ceiling? What are the independent companies that don't add their debts to the general balance? Is there actually any independent company?
These questions were raised as a result of the conflicting numbers proposed by the National Audit Office and the Finance Ministry on Wednesday (October 23, 2019) on the public debt in Bahrain.
The National Audit Office confirmed in its annual report that the public debt exceeded 13 billion and 983 million BD, indicating that some governmental companies borrowed money from external funds, but the ministry didn't add them to the general balance.
The office says that the ministry announced that the public debt amounted to 12 billion and 441 million BD at the end of 2018, which is contrary to the real number.
According to the number announced by the office, the ministry exceeded the ceiling of the public debt set by law in 2017. The government had passed a legal amendment in 2017, allowing the government to raise the public debt ceiling to 13 billion BD.
In addition to exceeding the legal debt ceiling, the public debt has reached a dangerous record. By the end of 2018, the government debt amounted to about 106% of GDP, while that of a country like Egypt reached 113% of GDP.
Since 2010, Bahrain's public debt has more than doubled. The debt was only 30% by the end of 2010. Factors such as government corruption, theft of public wealth and political crisis have contributed to this increase.
On the other hand, the statements announced by the office reveal that the Ministry of Finance does not transparently announce the ratio of public debt, despite the explanatory statement issued in response to the report of the National Audit Office.
The Ministry of Finance said in its statement that government debts reached 12 billion and 441 million BD last year, a figure which was not previously announced by the ministry. According to Trading Economist, Bahrain's debt by the end of 2018 was only 11.739 billion BD.
This number shows that government agencies in Bahrain are not transparent with regard to public debt. The Central Bank of Bahrain said in monthly statements at the end of last year that the public debt fell to 11 billion and 457 million BD from 11 billion and 739 dinars in October, which were also incorrect figures.
The Ministry of Finance also claimed that the difference in the public debt numbers was due to the fact that the debts of financially independent state companies were not included in the general balance, but the statement did not disclose those companies or the financially independent government bodies as they called them.
Many companies do not enjoy complete independence from the public budget or government decision. For example, Gulf Air belongs to Mumtalakat company (Bahrain's Sovereign Fund), but it receives direct support from the Government, making the independence of Mumtalakat not accurate.
Conflicting data have shown that government agencies lack transparency when it comes to debt disclosure, a key requirement in the process of controlling levels of public debt, which have reached unsafe limits exceeding the 106% ceiling of the GDP.