Shura Council to debate plans to channel more state company earnings into general budget

TDT | Manama

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Plans to channel a greater share of profits from state-owned companies into Bahrain’s general budget will be presented to the Shura Council on Sunday.

However, the chamber’s finance committee has urged members to reject the two draft laws, warning that they conflict with existing legislation, undermine the independence of public bodies and companies, and could ultimately leave the Treasury facing higher costs.

The measures stem from proposals first passed by Parliament.

One of the proposals would amend Article 10 of Decree-Law No. 39 of 2002 on the general budget.

Amendment

The amendment would require that the income of all public bodies and institutions be transferred to the public account, along with the State’s net returns from wholly stateowned companies and its share of profits in other firms after the legal reserve has been set aside.

The other would require at least 50 per cent of the State’s net profits from Bahrain Mumtalakat Holding Company and Bapco Energies to be entered in the budget.

After hearing from the Ministry of Finance and National Economy, Mumtalakat and Bapco Energies, the Shura Council’s Financial and Economic Affairs Committee said the aim behind both bills was already being met under the laws now in force.

Oversight

In its view, state-owned companies are already subject to oversight by the National Audit Office and must submit their budgets and final accounts to the Finance Ministry, so the draft laws would do little beyond repeating rules already in place.

The committee also said the plan runs against the system laid down in the budget law, which leaves some funds outside remittance where other laws provide for that.

It warned too that the move could cut into the financial and administrative independence granted by the Constitution to public bodies and institutions, leaving the bills at odds with Bahrain’s current financial system.

Losses

The committee went further, saying the two laws might leave the State bearing the losses and costs of the companies in question.

That, it said, could drive up public spending and widen the deficit. Any such move, the committee said, should come only after a full study of the likely financial effect.

The committee said bodies with their own legal standing and special financial rules were given that status for good reason.

The point, it said, was to let them run their own affairs, grow the sectors under their care and meet their aims without leaning on the state budget to fund their work.

Change

Any change touching such bodies should, in its view, respect the laws that created them and leave intact the basis of their financial and administrative independence.

The Finance Ministry reached much the same view.

It said the aim of the two bills can already be met through laws now in place.

Goals

It also argued that stateowned companies working on commercial lines need room to act if they are to meet the goals for which they were formed.

The ministry said both draft laws clash with the Commercial Companies Law, which governs the drawing up of accounts and the sharing out of profits.