Dec. 29, Manama (BNA): Following a Cabinet meeting presided over by Crown Prince and Prime Minister Prince Salman bin Hamad Al Khalifa, the government today announced a package of Cabinet-approved measures to reduce government spending, generate new revenue, and safeguard important subsidies for citizens in a press conference held at Gudaibiya Palace.
Bahrain’s Cabinet approves financial initiatives to strengthen stability and sustain citizen support
The Cabinet’s confirmation that water and energy rates for the first and second tariff bands for citizens’ primary residences, including those of extended families, will not change was a key component of the announcement. While price adjustments for other user categories would begin in January 2026, plans to restructure home utility support were postponed for additional research.
The actions build on the achievements made under Bahrain’s Fiscal Balance Program, which supported consistent economic growth by reducing recurring government spending as non-oil income more than doubled between 2018 and 2024. Over the last twenty years, Bahraini workers’ average earnings have more than quadrupled, the country’s GDP has grown fivefold from approximately USD 9 billion to USD 47 billion, and inflation has remained relatively low in comparison to major sophisticated economies.
In keeping with Bahrain’s Economic Vision 2030, the policies assist long-term fiscal sustainability, revenue diversification outside of hydrocarbons, and spending restraint while shielding people from pressure from rising living expenses.
Building on this development, the following important actions were announced today:
1. Cutting administrative costs by 20% for all government agencies while keeping Bahraini residents’ access to high-quality services. The Minister of Finance and National Economy was assigned by the Cabinet to take the appropriate action.
2. Increase government-owned businesses’ contributions to the Kingdom’s overall budget.
3. Referring a draft law to the Legislative Branch that, in accordance with agreements with the Legislative Branch, imposes a 10% tax on the profits of local businesses whose annual revenues exceed BHD 1 million or whose net annual profits exceed BHD 200,000. Any sum after the BHD 200,000 benchmark will be subject to the tax. With the goal of putting the draft law into effect in 2027, the action intends to encourage the diversification of income sources and assigns the Minister of Finance and National Economy the responsibility of taking the required actions.
4. Increasing the selective levy on soft drinks by referring a draft bill to the Legislative Branch, subject to cooperation with the Legislative Branch. The Minister of Finance and National Economy was assigned by the Cabinet to take the appropriate action.
5. In order to improve the use of undeveloped investment areas with current infrastructure services, a monthly fee of 100 fils per square meter will be implemented in January 2027. The Minister of Municipalities Affairs and Agriculture was assigned by the Cabinet to take the appropriate action.
6. In January 2026, costs for sewage services, excluding citizens’ principal dwellings, will be implemented. These prices will be determined at 20% of water consumption charges. The Minister of Works was assigned by the Cabinet to take the appropriate action.
7. A study of healthcare costs and worker permits. Domestic workers will be spared from the new costs, which will be gradually introduced over a four-year period beginning in January 2026. The Cabinet assigned the Ministers of Labor, Legal Affairs, and Health to take the appropriate actions in this regard.
8. Starting in January 2026, natural gas rates for businesses and factories will be gradually adjusted over a four-year period to reflect the true cost of use. The Minister of Oil and Environment was assigned by the Cabinet to take the appropriate action in this regard.
9. The creation of a gasoline pricing scheme. The Minister of Oil and Environment was assigned by the Cabinet to take the appropriate action in this regard.
10. Taking into consideration extended families living in a single household, the Cabinet confirmed that water and energy rates for the first and second tariff bands for citizens‘ primary dwellings shall stay the same. The Cabinet also decided to modify the electricity and water consumption tariffs for other categories, with implementation slated for January 2026, and to delay any changes to the mechanisms of electricity and water subsidies for citizens’ primary residences until more research is done. The Minister of Social Development and the Minister of Electricity and Water Affairs were assigned to take the appropriate action in this regard.
11. Simplifying and improving the effectiveness of government processes that facilitate investment in order to draw in foreign capital and bolster the private sector’s participation.
