Proposals to move additional public income into state budget face opposition

TDT | Manama

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Three draft laws due before the Shura Council today would force more state-linked income into Bahrain’s general budget and add new nursery-related offences under the Child Law.

However, two Shura committees have urged members to vote down the proposals.

One of the budget bills would place within the general budget all revenues of public bodies and institutions, along with the state’s returns from funds managed and invested by Bahrain Mumtalakat Holding Company.

The other would require the government to transfer at least 50 per cent of the state’s net profits from Mumtalakat and Bapco Energies into the budget.

A third bill would amend parts of the Child Law of 2012 to spell out nursery breaches in sharper terms and make it a criminal offence to open, run, move or alter a nursery without the approval of the Ministry of Education.

Rejection

The Financial and Economic Affairs Committee recommended rejection of the two budget bills, while the Women and Child Affairs Committee urged rejection of the Child Law amendment.

In its report, the Financial and Economic Affairs Committee said the proposed budget changes run against Decree-Law No. 39 of 2002 on the general budget, which already keeps some funds outside budget transfer rules under other laws.

It also said the move could cut into the financial and administrative independence granted to public bodies and institutions under Article 50(a) of the Constitution, taking the law in a direction that does not sit with Bahrain’s current financial system.

Aim

The committee said the stated aim of keeping watch over the money of state-owned firms is already met under the law as it stands.

Companies wholly owned by the state already fall under Article 4(e) of the Financial and Administrative Audit Office law (National Audit Office), while Article 55 of the General Budget Law requires them to submit their budgets and final accounts to the Finance Minister. On that view, the draft laws add no new means of scrutiny and instead repeat rules already in force.

It also warned that the plan could bring the reverse of what it seeks.

Once these firms are drawn into the budget in the proposed way, the state could also end up carrying their spending and losses.

Gap

That would push up public spending and, in turn, widen the fiscal gap.

The committee said the financial effect would need to be studied in full before any such step is taken.

Its report said bodies granted separate legal personality under their founding laws, and run under special financial systems, were given that standing because of the nature of their work and the need for room to manage it.

The point of separate budgets, it said, is to let such bodies run their own resources and support the sectors under their care without loading the state budget with the cost of their activities.