Question

The Bahraini public budget experiences deficit in the last seven years, what are procedures are taken by the government to solve this problem and achieve balanced budget?

Answer 1

As far as the budget deficit is concerned we need to have crystal-clear understanding of the term before going on to the remedial measures, what actually it is.

Budget-deficit is the situation when the government spends more than what it earns or in other words we can say government expenditures exceed government revenues.

To remove these shortcomings, government attempts various remedial measures such as increasing tax rates, cutting down the expenses etc. But they mave have negative effects as well.

Say for an example, on an individual level we have two options to get rid off budget-deficit either we can increase our revenue or cut off spendings, but in case of governments they increase the tax rate which may disappoint the taxpayers in one way or the other.

If the tax rates are quite heavier, they will slow down the growth rate and if we see it politically, the ruling party will end up getting defeat in front.

If government tries to cut off spendings it will slow down the revenue generation so it is better for the governments to cut off spending in the areas of the economy which are not working well or yielding out positives.