The Bahrain government had allocated BD1.535 billion ($4.05 billion) last year for subsidies and support schemes, Finance Minister Shaikh Ahmed bin Mohammed Al Khalifa has told MPs in writing.

Subsidies included BD67 million for food, BD268 million for petroleum products, BD610 million for gas and BD350,000 for electricity and water, reported the Gulf Daily News, our sister publication.

Another BD105 million went to low-income families, BD26 million to the Social Insurance Fund, BD4.4 million to the Royal Charity Organisation, BD45.3 million to Bahrain University, BD6 million to the Bahrain Teachers College, BD9.1 million to Bahrain Polytechnic and BD40 million covered rent allowances.

"Diesel is the second highest subsidised petroleum product, accounting for BD83 million out of BD288 million in 2012 - which was an increase of 46 per cent compared with 2007 - and 77 per cent of it goes towards the transportation and construction sector," said Shaikh Ahmed.

"Mumtaz fuel comes first accounting for 59 per cent of subsidised petroleum products.

"Subsidised gas products are 12.2 per cent of the gross domestic product and are being used mainly by Ba per cento, Alba, Banagas and GPIC besides generating electricity in power plants.

"Electricity accounts for 23 per cent of the total expenditure on subsidies and has increased by 77 per cent between 2007 and 2012, when it reached BD297 million.

"That increased to BD350 million last year."

He said the biggest increase in subsidies was in staple foods, rising 441 per cent between 2005 and 2012 to BD52 million - with 72 per cent of that directed towards meat, 22 per cent to flour and 6 per cent to poultry.

However, he said changes were needed to reduce the reliance on government subsidies and ensure they only benefit those who really need financial help.

"We are meeting with parliament to come up with solutions for this problem, which currently sees all Bahrainis, expatriates, companies and other sectors benefit from subsidised rates, but that shouldn't be the case," he said in the letter, which was a written response to MP Isa Al Kooheji.-TradeArabia News Service