The State Budget

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The state's budget consist of two stages the preparation stage and an implementation stage for every two fiscal years, as shown below.

1.1 The State budget preparation stage

1. Determine the general financial rules and spending ceiling for the next two fiscal years.
2. Discuss and review the preliminary estimates of the state budget with the relevant ministerial committees.
3. Submit a memorandum to the esteemed Prime Minister office regarding the preliminary estimates of the state budget.
4. Generalize the preparation of the approved preliminary budgets for ministries and government entities.
5. Research and prepare the first draft of the budget approval law after receiving it from ministries and government entities. 
6. Submit the final memorandum of the budget approval law to the esteemed Prime Minister office. 
7. Transfer the final version of the state budget law to the legislative authority. 
8. Issue the law approving the state budget.

1.2 The State budget implementation stage

1. Issue circular of the Minister of Finance and National Economy on the implementation of the law approving the State Budget. 

2. Receiving final budget allocation from Ministries and Government Entities to implement the State Budget.

3. Based on the circular of the Minister of Finance and National Economy, the implementation period of the State Budget will include the following procedures and operations:

• Receiving the Spending plan for non-manpower expenditures and a ten-year plan for projects expenditures.
• Allocation of budgets and revenue estimates according to the approved chart of accounts.
• Conducting Budget operations during budget implementation, which include budget transfers, requests for additional budgets, issuing of purchase requests & orders, and collection and payment procedures.
• Monitoring and Follow-up the financial performance of Ministries and Government Entities on a quarterly basis.

4. Issuing a circular from the Minister of Finance and National Economy to start preparation of Government Final Accounts.

5. A memorandum to the Prime Minister’s Office regarding the state’s consolidated financial Accounts and the State Budget implementation performance report.

1.3 Linking the strategic budget to the government program

The Government of Bahrain start implementing the strategic budget Since 2011-2012 as the models for preparing the state’s budget were developed by linking strategic priorities and requiring ministries and government agencies to prepare the budget according to the strategic plans and performance indicators.

1.4 Equal Opportunity Budgets

MOFNE plays a key role in supporting government agencies in the preparation of budgets that are responsive to women's needs. This allows the State to be disaggregated by sex, so that the resources allocated for programs, projects and services benefiting women is determined in the budgets. Gender Responsive Budgets are a follow-up and evaluation tool for integrating women's needs into programs and services to achieve gender balance by monitoring and measuring any gaps associated with the use and participation (expenditure and contribution) of women and men in the national economy and community development. 

This also aid in ensuring that the rights and duties of women and men in the fields of political, social, cultural, and economic life are equitable, in accordance with the principle of equal opportunities among citizens and in accordance with the Constitution of the Kingdom of Bahrain.

Stage One 

• Developing models for preparing the state budget by creating tables linking to strategic priorities.
• Mandating ministries and government entities to prepare the budget according to their strategic plans with performance indicators.

Stage Two 

• Enhancing budget preparation data and focusing on direct linking of budgets to strategic objectives.
• Developing and Improving data on the execution of the state budget.

Stage Three

• Developing budget preparation data with guidelines to facilitate the preparation process by ministries.
• Establishing financial rules for contracts and government obligations within recurrent expenditures.
• Enhancing the linkage between financial and strategic information related to the government program.
• Regular communication with ministries and government entities to monitor budget execution performance.

• Activating partnerships with the private sector to finance and implement government projects and drafting the guiding regulations for organizing partnerships between the public and private sectors.

Stage Four

• Implementing a system of budget incentives.
• Applying the zero-based budgeting principle for ministries and government entities.
• Automating the procedures for preparing and executing the state budget.
• Focusing on preparing a ten-year plan for government entities that includes targets for the financial balance program and the future
• direction of planned projects for the medium and long term.

Spending plan of Recurrent Expenditure: 

Each ministries and government entities prepare their spending plan that includes its needs for goods and services for the upcoming budget period, and it is distributed according to the appropriate budget items.

After approval by the concerned authorities and the issuance of the State Budget Law, disbursement must be committed in accordance with what has been approved, and the disbursement plan includes the following details as a minimum:

1.    Type of expense (includes all financial obligations that have been committed and those that have not been committed).
2. Description of expenditure.
3. Nature of expenditure (in the case of contracts, a statement of the nature of the contract).
4. Contract duration or financial obligations.
5. Names of potential suppliers, and in the case of a valid or ongoing contract, the name of the current supplier must be specified.
6. Estimates of actual expenditures by line item for the upcoming budget period.
7. Any additional data determined by the Ministry of Finance and National Economy. 

The Ten-year Plan for Projects:

The Ten-year plan includes ministries & government entities' long-term development programs and projects along with their estimated costs, based on the priorities set to achieve Bahrain’s government program & economic vision. This plan aims to focus on the future by diversifying funding sources, thereby enabling optimal utilization of all available resources.

Public Revenue Development:

Ministries and government entities are required to prepare quarterly reports on their revenue collection performance and submit them to the Public Revenue Policy Directorate or to the Assistant Undersecretary for Financial Policies and Budget office. These reports must include the following:

• A comparison between the estimated revenues in the general budget and the actual revenues collected for each item, with an explanation of any surpluses or deficits. Additionally, the government entity must outline the measures to be taken in case of a shortfall in actual revenues compared to the estimated.
• Justifications for any increases or decreases in revenues compared to the budgeted figures and the actual revenues for the same quarter of the previous year.
• Any other information or clarifications required by the Public Revenue Policy Department.
• Ministries and government entities must coordinate with the Public Revenue Policy Directorate to explore more effective and efficient initiatives for developing new services and reassessing existing ones. Additionally, they are required to price these services to recover the costs and enhance revenue generation.

Follow up on financial risks and analyze expectations resulting from the quarterly closing: 

We communicate continuously with ministries and government entities by holding quarterly meetings for each fiscal year in order to follow up on the financial performance of ministries and government entities, discuss financial forecasts, and address any difficulties encountered in the budget implementation process, with the aim of reducing potential financial risks.

Budget Incentives: 

In case Ministries and Government Entities achieve the financial performance indicators in operational recurrent expenditures, they will be granted an additional budget equivalent to a percentage of the savings achieved in non-manpower recurrent expenditures. Additionally, it will be granted an additional budget equivalent to a percentage of the revenue amounts which have been achieved as a result of implementing revenue development initiatives in accordance with actual results. 

• The Kingdom of Bahrain has developed fiscal policies aimed at promoting economic growth and encouraging foreign investment, with a strong focus on transparency and citizen access to budget-related information. 
• The fiscal policies of the Kingdom of Bahrain are formulated and implemented within the framework of Economic Vision 2030. This vision aims to achieve fiscal sustainability by strengthening the national economy through various programs that reinforce the financial and economic foundation of the Kingdom. These efforts are designed to ensure sustainable economic growth and the prudent use of national resources, ultimately benefiting both current citizens and future generations.
• As part of its commitment to transparency and participation, Bahrain publishes various reports, including financial reports, policies, initiatives, economic and fiscal plans, in addition to the State Budget. These reports are issued by the Ministry of Finance and National Economy in collaboration with other ministries and government entities, with the aim of enhancing transparency and giving everyone the right to view information related to the State’s Budget and many other financial reports.

Community Participation in Budget Preparation:

The Kingdom of Bahrain also promotes community participation in budget preparation by providing citizens with access to detailed information related to the State’s Budget for every two fiscal years. This includes revenue and expenditures of ministries and government entities, government subsidies, revenue, and expenditure of municipalities as well as the capital secretariat, following the approval of the budget by His Majesty King Hamad bin Isa bin Salman Al Khalifa. This approach ensures that the budget reflects the strengths, needs, and aspirations of citizens, thereby increasing its effectiveness and alignment with the public’s interests.