Tag Archives subsidy

You want meat?

You want meat?

The controversial removal of meat subsidies in Bahrain will be lifted starting from tomorrow and parliament has given up the fight to have the subsidy reinstated. Had they done their job properly as they are sworn to do, they would have had a serious look at all the subsidies offered by the government to various sectors when they were reviewing the government plan for the next few years. They should have also combed through the budget professionally and raised flags of objection, or at least call for better clarifications and expenditure; thus, pretend at least to exercise their oversight role. What Bahrain did get from this parliament; however, was a white flag of surrender – as expected – allowing the government to disregard their thundering tantrums and promises of resignations, which of course will never materialise. Why give up a cushy job?

Like other Gulf Arab oil exporters, Bahrain subsidises goods and utilities including meat, fuel, electricity and water, keeping prices ultra-low to buy social peace.

But since oil prices plunged last year, slashing state revenues, the subsidies have become increasingly hard for governments to afford – especially in Bahrain, which has smaller oil and financial reserves than its neighbours.

So the government announced last month that it would remove subsidies on meat from Sept. 1, allowing domestic prices to rise and compensating Bahraini citizens – but not foreigners, who comprise about half of the population of roughly 1.3 million – with cash payments.

Reuters

What are the subsidies offered by the government I hear you ask? Well, here’s an overview (pdf) of those scheduled in the 2015/2016 budget and I also provide a comparative look at the 2011/2012 budgeted subsidies.

Bahrain 2011/2012 Subsidies Table
2011/2012 Subsidies Table
Bahrain 2015/2016 Subsidies Table
2015/2016 Subsidies Table

If you look at the food subsidy in Bahrain, the government is looking to save approximately BD24 million (US$ 63m) by 2016; however the electricity and water subsidy will increase to approximately BD65 million by then too. Apart from that not making sense to my simple brain, I’d like to know how the biggest subsidy in that schedule is actually apportioned? My understanding is a good chunk of that directly supports industry in natural gas subsidies that presumably goes to ALBA, the aluminium smelter, and other industries like it.

Of course I understand that the government must react to the appreciable drop of oil prices which is its main source of income, and I appreciate that it has put in mechanism to defray the cost increase on meats by offering citizens alone a monthly stipend and of course I thank them for their generosity, but I wonder if other subsidies should have been lifted first? Unless of course this is an initial foray into the lifting of other subsidies in the years to come, and the removal of subsidies on meat is to prepare the populace? Will the government ultimately be removing of all subsidies and even introduce of taxation to meet the increasing budgetary deficit?

I don’t have a crystal ball, but I’m willing to put in a bet that this scenario is actually closer than many people think. It’s because of this that we need much better oversight with a parliament whose members are much more aware of fiscal requirements, have the necessary understanding of budgets and fiscal policies, and also have the necessary tools to exercise proper oversight on government and its spending. Ultimately, we need a parliament which is much more accountable to those who elected them. However, had I that same crystal ball, it might well tell me that the latter just won’t happen.

In the mean time, register here to receive the subsidy if you’re a Bahraini, and here’s some meat to fill you up in the mean time.

Dig in!

camel feast for one - Camel feast in (presumably) Saudi. The upside of the removal of meat subsidies is that we'll never have this sort of excess in Bahrain.
Camel feast in (presumably) Saudi. The upside of the removal of meat subsidies is that we’ll hopefully never have this sort of excess in Bahrain. Ever.

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The Handouts Culture intensifies

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I think I am like a lot of people who cringe every time I feel that people are just getting handouts; regardless if those handouts are actually deserved, the act itself is demeaning, especially in an area of the world which is supposed to be rich. Alas, it seems that I am in a minority in this feeling as it has not only become the norm, but government, parliament, and society regularly just dish out money as the panacea to all poverty ills. Not many of those giving stop for a while and consider that it probably is best if they at least got the people receiving the largess could at least be made to feel that they earned it.

Yes, I know that to the poor, ego might take a backseat to the normal drudge of existence, but the government and parliament have become so blazé, even blatantly so, in their “giving”.

Two headlines made me cringe in today’s papers; the first is the intention of MPs to open “supermarkets for the poor” in which subsidised foodstuff will be sold and the second is MPs again want to give the Ministry of Social Development BD5 million ($13.2m) to help it cover paying the extra 3,000 needy families whom were added to its rolls of the poor over the last two years, although the minister only asked for BD3.5m ($9.25m), I guess they want to demonstrate their generosity.

The reasons for my cringing in the first instance is that there are proven methods in which the poor are assisted in various societies around the world, one of those methods is a food stamps program in which the needy are given stamps or cards which they can use in any market to help them buy their foods. The vendors then redeem those stamps with a government agency. That program obviously is not free of criticism, but the fact remains that it negates the need for the establishment of “poor shops” which could very well be abused (as could the stamps program, I know) and also allows for the provision of unified prices for foodstuffs which are subsidised only to those deserving that subsidy. I have no idea why our MPs and the Ministry of Social Development ignored this tried and tested method of helping those in need.

The other instance of course is the seemingly willy-nilly way in which parliament is handling the national budget. Here, a party asks for a specific studied budget for one of its programs and we find that for inexplicable practical reasons the parliament – whose one of its main roles is the protection of public funds – gives out additional 30% for no reason whatsoever! What guardianship of public funds is this?

Further, in the report referred above, no one seems to have asked the very important question of why in this age of economic boom do we have 3,000 families descending into poverty?

Maybe I should send them a link to explain to them in simple terms what their agenda should be to combat poverty:

5 factors of povertyThe simple transfer of funds, even if it is to the victims of poverty, will not eradicate or reduce poverty. It will merely alleviate the symptoms of poverty in the short run. It is not a durable solution. Poverty as a social problem calls for a social solution. That solution is the clear, conscious and deliberate removal of the big five factors of poverty.

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