Last week, the Bahrain government announced the discovery of large natural resource deposits, including approximately 80 billion barrels of shale oil, and 20 trillion cubic feet of natural gas. While there remain questions over the precise extraction cost, and the volume of recoverable oil and gas, at this stage, Bahrainis should feel reasonably confident that they will experience a significant windfall in the coming years. How should the government look to spend it?
The first order of business is to bring down the public debt considerably. Bahrain has historically maintained good fiscal discipline, and as recently as 2009, the public debt was below 10 per cent of GDP, compared to almost 100 per cent today. High levels of public debt raise interest rates on the debt that the government has to pay, they create pressure on the currency, and they make investors wary of investing as they fear default. As a country with a large public debt, a fixed exchange rate, and an economic strategy based on attracting foreign investment, bringing the public debt down to 50 per cent of GDP or less should be a priority.
The next order of business is to resume implementation of the economic vision 2030, but with some modifications that take into account what is happening across the King Fahd Causeway in neighbouring Saudi Arabia. Saudi Crown Prince Mohamed bin Salman’s aggressive economic strategy has contained many surprising elements, including permitting cinemas and allowing women to drive. These changes mean that Bahraini economic strategists need to reconfigure their plans to ensure that Bahrain continues to act as a complement to the Saudi economy.
_________________
Read more:
Economics 101: how can we improve online reviews’ accuracy?
Economics 101: The coming trade war offers opportunities for Arabian Gulf countries
_________________
Saudi Arabia’s Vision 2030 leaves two significant opportunities open for Bahrain. First, Saudi Arabia has been rapidly ratcheting up the cost of using foreign labour; ultimately, this will create upward pressure on the cost of doing business in the kingdom. Investors will still flock to it due the size of the market, but this trend allows Bahrain to create a niche as a place where it is cheaper to produce than Saudi Arabia, if it keeps fees and restrictions on foreign labour relatively low. The recently introduced flexi-visa, which allows foreigners to self-sponsor, could become a very useful policy in maintaining Bahrain’s competitiveness.
However, Bahrain’s long-term success should ideally be built on something other than diminished labour costs. The second opportunity is to eliminate as much as possible taxation that is borne by the private sector. The budgetary pressure caused by falling oil prices has forced the government to levy significant fees on companies, such as commercial registration fees, social insurance for Bahraini employees, and fees associated with the employment of foreign workers. Admittedly, making foreign workers more expensive is part of the economic strategy designed to improve the capacity of Bahraini workers; however, some of the increases in these fees are likely to be purely fiscal-accounting decisions aimed at generating revenues. Where possible, the government should eliminate such increases, and make operating a business in Bahrain as free of fees as possible.
However, critically, one policy that should not be reversed is the gradual elimination of subsidies. Artificially lowering the price of goods and services served a purpose in the past, when the economy was extremely basic, but in the twenty-first century they have become expensive and counterproductive, as they usually benefit the rich much more than the poor. Moreover, they encourage wasteful consumption, which must be avoided now that sustainable growth and green investments are requirements for countries that want to be recognized as constructive members of the international community. The fall in oil prices was very painful for the people in Bahrain, but as a silver lining, it helped the government summon the political will necessary to wean the economy off subsidies.
Together, these policies will help Bahrain rescale the economic freedom rankings. A few years ago, Bahrain was considered the most economically free country in the Middle East according to reputable indices such as that of the Heritage Foundation. Stabilising government finances and boosting the commercial sector will help Bahrain regain its high global ranking, keeping it attractive to foreign investors.
Finally, the government must seize the opportunity to continue building the capacity of the private sector—the most important component of the economic vision 2030. The government should continue to reduce public sector employment and salaries, and minimise purchases from the private sector, pushing companies toward having to compete in the global marketplace to survive. Whenever the government has the choice of spending more or taxing less, it should choose the latter.
One area that requires a lot of attention is technological innovation: the government must avoid the temptation of investing in research and development directly; instead, it must use the oil and gas windfall to create a commercial environment where private firms invest their own funds in research and development, without the support of government subsidies. If the government succeeds in this goal, then the current natural resource discovery will hopefully be the last one that Bahrain ever needs.
Omar Al-Ubaydli (@omareconomics) is a researcher at Derasat, Bahrain.
Diriyah%20project%20at%20a%20glance
%3Cp%3E-%20Diriyah%E2%80%99s%201.9km%20King%20Salman%20Boulevard%2C%20a%20Parisian%20Champs-Elysees-inspired%20avenue%2C%20is%20scheduled%20for%20completion%20in%202028%3Cbr%3E-%20The%20Royal%20Diriyah%20Opera%20House%20is%20expected%20to%20be%20completed%20in%20four%20years%3Cbr%3E-%20Diriyah%E2%80%99s%20first%20of%2042%20hotels%2C%20the%20Bab%20Samhan%20hotel%2C%20will%20open%20in%20the%20first%20quarter%20of%202024%3Cbr%3E-%20On%20completion%20in%202030%2C%20the%20Diriyah%20project%20is%20forecast%20to%20accommodate%20more%20than%20100%2C000%20people%3Cbr%3E-%20The%20%2463.2%20billion%20Diriyah%20project%20will%20contribute%20%247.2%20billion%20to%20the%20kingdom%E2%80%99s%20GDP%3Cbr%3E-%20It%20will%20create%20more%20than%20178%2C000%20jobs%20and%20aims%20to%20attract%20more%20than%2050%20million%20visits%20a%20year%3Cbr%3E-%20About%202%2C000%20people%20work%20for%20the%20Diriyah%20Company%2C%20with%20more%20than%2086%20per%20cent%20being%20Saudi%20citizens%3Cbr%3E%3C%2Fp%3E%0A
WHAT FANS WILL LOVE ABOUT RUSSIA
FANS WILL LOVE
Uber is ridiculously cheap and, as Diego Saez discovered, mush safer. A 45-minute taxi from Pulova airport to Saint Petersburg’s Nevsky Prospect can cost as little as 500 roubles (Dh30).
FANS WILL LOATHE
Uber policy in Russia is that they can start the fare as soon as they arrive at the pick-up point — and oftentimes they start it even before arriving, or worse never arrive yet charge you anyway.
FANS WILL LOVE
It’s amazing how active Russians are on social media and your accounts will surge should you post while in the country. Throw in a few Cyrillic hashtags and watch your account numbers rocket.
FANS WILL LOATHE
With cold soups, bland dumplings and dried fish, Russian cuisine is not to everybody’s tastebuds. Fortunately, there are plenty Georgian restaurants to choose from, which are both excellent and economical.
FANS WILL LOVE
The World Cup will take place during St Petersburg's White Nights Festival, which means perpetual daylight in a city that genuinely never sleeps. (Think toddlers walking the streets with their grandmothers at 4am.)
FANS WILL LOATHE
The walk from Krestovsky Ostrov metro station to Saint Petersburg Arena on a rainy day makes you wonder why some of the $1.7 billion was not spent on a weather-protected walkway.
KEY DEVELOPMENTS IN MARITIME DISPUTE
2000: Israel withdraws from Lebanon after nearly 30 years without an officially demarcated border. The UN establishes the Blue Line to act as the frontier.
2007: Lebanon and Cyprus define their respective exclusive economic zones to facilitate oil and gas exploration. Israel uses this to define its EEZ with Cyprus
2011: Lebanon disputes Israeli-proposed line and submits documents to UN showing different EEZ. Cyprus offers to mediate without much progress.
2018: Lebanon signs first offshore oil and gas licencing deal with consortium of France’s Total, Italy’s Eni and Russia’s Novatek.
2018-2019: US seeks to mediate between Israel and Lebanon to prevent clashes over oil and gas resources.
Results
2pm: Serve U – Maiden (TB) Dh60,000 (Dirt) 1,400m; Winner: Violent Justice, Pat Dobbs (jockey), Doug Watson (trainer)
2.30pm: Al Shafar Investment – Conditions (TB) Dh100,000 (D) 1,400m; Winner: Desert Wisdom, Bernardo Pinheiro, Ahmed Al Shemaili
3pm: Commercial Bank of Dubai – Handicap (TB) Dh68,000 (D) 1,200m; Winner: Fawaareq, Sam Hitchcott, Doug Watson
3.30pm: Shadwell – Rated Conditions (TB) Dh100,000 (D) 1,600m; Winner: Down On Da Bayou, Xavier Ziani, Salem bin Ghadayer
4pm: Dubai Real Estate Centre – Maiden (TB) Dh60,000 (D) 1,600m; Winner: Rakeez, Patrick Cosgrave, Bhupat Seemar
4.30pm: Al Redha Insurance Brokers – Handicap (TB) Dh78,000 (D) 1,800m; Winner: Capla Crusader, Bernardo Pinheiro, Rashed Bouresly
BMW%20M4%20Competition
%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3E3.0%20twin-turbo%20inline%20six-cylinder%0D%3Cbr%3E%3Cstrong%3ETransmission%3A%3C%2Fstrong%3E%20eight-speed%0D%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E503hp%0D%3Cbr%3E%3Cstrong%3ETorque%3A%3C%2Fstrong%3E%20600Nm%0D%3Cbr%3E%3Cstrong%3EPrice%3A%3C%2Fstrong%3E%20from%20Dh617%2C600%0D%3Cbr%3E%3Cstrong%3EOn%20sale%3A%3C%2Fstrong%3E%20Now%0D%3C%2Fp%3E%0A
Company profile
Company name: Dharma
Date started: 2018
Founders: Charaf El Mansouri, Nisma Benani, Leah Howe
Based: Abu Dhabi
Sector: TravelTech
Funding stage: Pre-series A
Investors: Convivialite Ventures, BY Partners, Shorooq Partners, L& Ventures, Flat6Labs
How tumultuous protests grew
- A fuel tax protest by French drivers appealed to wider anti-government sentiment
- Unlike previous French demonstrations there was no trade union or organised movement involved
- Demonstrators responded to online petitions and flooded squares to block traffic
- At its height there were almost 300,000 on the streets in support
- Named after the high visibility jackets that drivers must keep in cars
- Clashes soon turned violent as thousands fought with police at cordons
- An estimated two dozen people lost eyes and many others were admitted to hospital
JAPAN SQUAD
Goalkeepers: Masaaki Higashiguchi, Shuichi Gonda, Daniel Schmidt
Defenders: Yuto Nagatomo, Tomoaki Makino, Maya Yoshida, Sho Sasaki, Hiroki Sakai, Sei Muroya, Genta Miura, Takehiro Tomiyasu
Midfielders: Toshihiro Aoyama, Genki Haraguchi, Gaku Shibasaki, Wataru Endo, Junya Ito, Shoya Nakajima, Takumi Minamino, Hidemasa Morita, Ritsu Doan
Forwards: Yuya Osako, Takuma Asano, Koya Kitagawa
How Apple's credit card works
The Apple Card looks different from a traditional credit card — there's no number on the front and the users' name is etched in metal. The card expands the company's digital Apple Pay services, marrying the physical card to a virtual one and integrating both with the iPhone. Its attributes include quick sign-up, elimination of most fees, strong security protections and cash back.
What does it cost?
Apple says there are no fees associated with the card. That means no late fee, no annual fee, no international fee and no over-the-limit fees. It also said it aims to have among the lowest interest rates in the industry. Users must have an iPhone to use the card, which comes at a cost. But they will earn cash back on their purchases — 3 per cent on Apple purchases, 2 per cent on those with the virtual card and 1 per cent with the physical card. Apple says it is the only card to provide those rewards in real time, so that cash earned can be used immediately.
What will the interest rate be?
The card doesn't come out until summer but Apple has said that as of March, the variable annual percentage rate on the card could be anywhere from 13.24 per cent to 24.24 per cent based on creditworthiness. That's in line with the rest of the market, according to analysts
What about security?
The physical card has no numbers so purchases are made with the embedded chip and the digital version lives in your Apple Wallet on your phone, where it's protected by fingerprints or facial recognition. That means that even if someone steals your phone, they won't be able to use the card to buy things.
Is it easy to use?
Apple says users will be able to sign up for the card in the Wallet app on their iPhone and begin using it almost immediately. It also tracks spending on the phone in a more user-friendly format, eliminating some of the gibberish that fills a traditional credit card statement. Plus it includes some budgeting tools, such as tracking spending and providing estimates of how much interest could be charged on a purchase to help people make an informed decision.
* Associated Press
Match info:
Burnley 0
Manchester United 2
Lukaku (22', 44')
Red card: Marcus Rashford (Man United)
Man of the match: Romelu Lukaku (Manchester United)
Scorecard
Scotland 220
K Coetzer 95, J Siddique 3-49, R Mustafa 3-35
UAE 224-3 in 43,5 overs
C Suri 67, B Hameed 63 not out
