A rethink has been urged on a proposed parliamentary legislation to cap government borrowing at 60 per cent of the gross domestic product (GDP).The proposal by five MPs aims to control Bahrain’s borrowing which had reached BD16.7 billion by the end of last year. His Majesty King Hamad had issued a Royal Decree in September amending the 1977 Development Bonds Law to set the cap at BD16bn. The Finance and National Economy Ministry warned the move would prevent the government from covering existing deficits in the budget.“Borrowing has already exceeded 60pc and making it obligatory by law to respect the cap will just paralyse the government’s treasury,” the ministry said.The Central Bank of Bahrain (CBB) also said that the proposal would hamper the functioning of the government.“Public debt stands at 101pc of the GDP and just bringing it down to 60pc will put the government in legal and financial trouble with holders of bonds since it would be deemed illegal,” the CBB said.Meanwhile, on Tuesday, MPs are set to debate a proposed amendment to the 1976 Social Insurance Law that would alter the calculation of pensions, change the period of retirement eligibility and reduce workers’ contributions from 7pc to 6pc.The Social Insurance Organisation (SIO) said such a move could lead pension funds to quicker bankruptcy. The Supreme Council for Women (SCW) has asked MPs for patience and to put the proposal on hold.Plans for a new ‘social shield’, presented by five MPs led by Mr Qarata will also be debated on Tuesday. The proposal would make it compulsory for the government to grant a range of allowances to tackle inflation, and address citizens’ needs for housing, education, oil and gas, electricity and water, flour, food staple and meat.A rethink has also been urged by the Social Development, Finance and National Economy, Education, and Electricity and Water Affairs ministries, who stressed that the current allowance format was more flexible. (ICE Doha)

Fonte notizia: Gulf Daily News