Bahrain budget gap widens to $1.2bn in 2010

Bahrain's budget deficit widened to 459.7 million dinars ($1.2 billion) in 2010 from 446m dinars in 2009 as lower oil prices took their toll, finance ministry data showed on Thursday.

The small non-Opec oil producer, whose economy was hit by its worst unrest since the 1990s earlier this year, needs oil prices of around $100 per barrel to balance its budget.

US benchmark crude prices floated between $65 and $115 per barrel last year.

As a percent of gross domestic product, the deficit narrowed slightly to around 5.6 per cent down from a 6.0 per cent in 2009, according to Reuters calculations.

Analysts polled by Reuters expected a deficit of 0.7 per cent of gross domestic product in 2010 and 1.4 per cent in 2011.

Revenue reached 2.18bn dinars, well above planned 1.46bn, as income from crude and natural gas exports was nearly 65 per cent higher than expected, the data showed. Hydrocarbons accounted for 85 per cent of Bahrain's budget revenue.

The Gulf Arab country's expenditures reached 2.64bn dinars, below budgeted 3.07bn dinars, the data showed.

The small island kingdom was thrown into turmoil in February when citizens, mostly majority Shi'ites, took to the streets demanding democratic reforms in the Sunni-ruled state. The protests were put down in March in a government crackdown that called in troops and police from neighbouring Arab countries.

In May, Bahrain's parliament approved a 44 per cent rise in government spending in 2011-2012 compared to the previous two-year period.

Robust oil prices are seen alleviating some of the spending pressure this year. However, Bahrain is the only Gulf state projected to see a budget deficit in 2011.

Bahrain's central bank is expecting the economy to grow by three per cent in 2011.