I Pr-Eriicvt6A I REPORTS nESKw I WITHIN I FILE Pflnyv LONE WEEK | DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized Not For Public Use Report No. 24la-BH CURRENT ECONOMIC POSITION Public Disclosure Authorized AND PROSPECTS OF RARRATN Public Disclosure Authorized Dece..Der .28, 1977.3 Public Disclosure Authorized Erurope, Midd"Le East and'iNorth Airrica Region Country Programs I This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report. Currency Equivaients uurrency Unit Bahrain Dinar (BD) 1 BD = 1,000 fils 1970 BD 1 US$ 2.10 US$ 1 = BD o.h8 1971-72 BD 1 = US$ 2.28 US$ 1 = BD 0.44 Since February 1973 BD 1 = US$ 2.53 US$ 1 = BD 0.4o iItDLJI: url Uu~LEANi 1 -A~~ ,T rage No. BASIC DATA MAP S-UMMARY AND CONCLUSIONS ........................... I-iv i. ThiE SETTING ....................................... II. HUMAN RESOURCES ................................... 2 Population and Employment ................ .. 2 Education ................................ 3 Health ............................... 5...... III. PRINCIPAL ECONOMIC SECTORS ........................ 5 Oil ................................ 6 Natural Gas. ...... .. 7 Industry... 7 Water Resources .. ............. 11 Agriculture . .12 Fishing ... 13 Tourism .1 .. .. ... ... 14 Transport ... 15 Air Transport . 15 Road Transport. ... 15 Sea Transport . .16 Telecommunications ... 17 Power..17 UrbanUrbnowaer Supy....................W4ater Sunnlv --- ee*- .... ,................------ 1817 IV. RECENT PERFORMANCE -------- 18 External Seetnr -- -- 19 Foreign Assets . .20 External Aid ............. .................... 21 Internal Finance . ............. 21 Money and Bankino ---- 25 Monetary Developments ............ 26 Prinp--2 Piel e s == =. =. =.==.. .... .......... lJages.27a . .==.... .... 2 7 V. DEVELOPMENT PROSPECTS AND STRATEGY .27 This report is based on the findings of an economic mission Mehsrs. Haoeld Lahsen an Me-hi 1A73 Th. mi-li. co-4q*.z f Messrs. Harold Larsen and Mehdi Ali. Page l of 2 nages COUNTRY DATA - BLKAIN AREA 2 POPULATION DENSITY 660 m 12 Rate of Growtht 3.6 (from 1970 to 1972) 3,670 per km2 of arable land POPULATION CHARACTERISTICS (1971) HEALTH (1971) Crude Birth Rate (per 1000) 30 Ponulation per physician 2.000 Crude Death Rate (per 1,000) .. Population per hospital bed 238 Infant Mortality (per 1,000 live births) 23 INCOME DISTRIBUTION DISTRIBUTION OF LAND OWNERSHIP % of national income, highest quintile .. % owned by top 10% of owners lowest quintile .. % owned by smallest 10% of owners .. ACCESS TO PTPED WATER (1071! ArCr.ES TO FTL.TRTrITTV (IQ71' % of population - urban 90 % of population - urban 95 - rural - rural NUTRITION EDUCATION (1971) Calorie intake as % of requirements _ Adult literacy rate % 46 Per capita protein intake Primary school enrollment % 74 1/ GNP PER CAPITA in 1971 US $ 640 GROSS NATIONAL PRODUCT IN 1971 ANNUAL RATE OF GROWTH (%. constant prices) US $ Mln. % 1960-65 1965-70 1971 Ghr at Market Prlcesi .8 lo0 . Gross Domestic Investment . Gross National Saving *0 . Current Account Balance -28.0 18.0 * * Exports of Goods, NFS . T--orts of Goods, NFS..** OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1971 Value Added Labor Force V. A. Per Worker US$Mln. 7 Mln. % US $ % Agriculture 2.7 1.0 0.004 6.5 675 I P5 Industry 216.8 76.5 0.018 29.5 11,970 257.8 Services 6.u 22.5 0037 62.0 1 7,7w0 3. Unallocated . 0.002 .0 °_ Total/Average 28 , 100.0 0.061 100.0 100.0 GOVERNMENT FINANCE General Government Central Government ( BD Mln.) % of GDP ( BD Mln.) %of GDP 1972 197 2 197 2 1972 Current Receipts *. *- 32.8I24.6 Current Expenditure 0.o 26.1 19.6 Current Surplus * * 6.7 5-0 Capital Expenditures *. *- 7.3 5.5 External Assistance (net) .. *- -- 1/ Tne Per Capita GNP estimate is at 1970 market prices, calculated by the same conversion technique as the 1972 World Bank Atlas. All other conversions to dollars in this table are at the average exchange rate prevailing during the period covered. 2/ Total labor force; unemployed are allocated to sector of their normal occupation. "Unallocated" consists mainly of unemployed workers seeking their first job. not available not applicable Page 2 of 2 pages COUNTRY DATA - BAHR.AIN MONEY, CREDIT and PRICES 1969 1970 1971 1972 (Million BD outstanding end neriod) Money and Quasi Money 40.5 47-7 62.8 75.9 Bank Credit to Public Sector (net) -8.7 -8.2 -9.9 -4.6 Bank Credit to Private Sector 23.5 24-7 35-7 44.1 (Percentages or Index Numbers) Money and Quasi Money as % of GDP .. 41.3 W0.6 57.0 General Price Index (1963 = 100) *. Annual percentage changes in: General Price Index .. Bank credit to Public Sector 33.3 5.7 -20.7 115.2 Bank credit to Private Sector 30.6 5.1 "4.5 23-5 BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 1968-71) 1969 1970 1971 US $ Mln % (Millions US $) Raf9nvA 011 202.0 8'lo Exports of Goods, NFS 233o4 237.9 316.2 Others (including re-exports) 47.3 19.0 Imports of Goods, NFS 219.0 286.9 346.8 Resource Gap (deficit = -) 4.L4 -9,O -307. Interest Payments (net) L..2 1 2 )4. All nther cnmmoditip .... Workers' Remittances -. Total 2 9.3 10Q,O Other Factor Payments (net) 4.9 -7.1 -2.0 Net Transfers o. .. .. EXTERNAL DEBT, DECEMBER 31. 197 2 Balance on Current Account 2.7 -51.9 -_2B970 it US $~~~~~~~~~~~~~~~~~~~~~TMl, Direct Foreign Investment 2.1 65.1 54.7 Net MLT Borrowing .. 6.. O Public Debt, incl. guaranteed 5,9 Disbursements .. .. Non-Guaranteed Private Debt 0 Amortization o. Total outstanding & Disbursed 5,9 Subtotal o8 1§ 267l Capital Grants .. .- .. DEBT SERVICE RATIO for 1974- Other Capital (net) O. .. .. % Other items n.e.i _, , , Increase in Reserves (+) 4.8 13.2 26.7 Public Debt, incl. guaranteed 0.2 - ~~~~~Non-Guaranteed Private Debt.. Gross Reserves (end year) 3/ 116.3 128.3 182.2 Total outstanding & Disbursed Net Reserves (end year) 874 100.l4 135.7 0.2 RATE OF EXCnANCE IBRD/IDA Lr,NDING, (latest ,-uonth) (Million US Through - FebrKuazy. 1973 IBRD IDA US $ 1.00 = BD 0.44 BD 1.00 = US $ 2.28 Outstanding & Disbursed undisbursed Since - Februaary, 1973 Outstanding incl. Undisbursed US $ 1.00 = BD 0.40 BD 1.00 = US $ 2.53 1/ Ratio of Debt Service to Exports of Goods and Non-Factor Services. _/ Of Alnminum Bahrain Company only. 3/ Official reserves plus commercial banks' declared holdings. not available not applicable «MsA Region iBRD 10471R b ,. JULY 1973 X -kd , 0 | E t E4i ' /~~~~~~~~~~~ * , ,~~~/ -- ,; 0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~: I 1-5;;?~~~ 7 ~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~. SUMM'ARY AND CONCLUSIONS i. Until the 1930Ws, Bahrainis economy depended largely on pearl div- ing, fishing and transit trade. Today, the dominant factors in the economy are the petroleum industry, continuing transit trade, and more recently, in- dustrial diversification. ii. Bahrain's population was estimated at 224,000 in 1972. About 18 percent of the population are expatriates, mostly Omanis, Indians, Pakistanis and Iranians. Population growth is high, amounting to 3.6 percent annually. Famlly planning as a means to control the population growth is under Govern- ment consideration, but this step has not yet been taken. The economically active population in 1971 was 28 percent of the total population. Of the economically active population, 7 percent was engaged in agriculture and fishing, 14 percent in industry (of which 7 percent in petroleum production and refining), 17 percent in construction, 13 in trade and ancillary serv- ices, and 14 percent in transport, finance and 30 percent in community, social and personal services. Unemployment is relatively low (see Table 1.3) iii. Bahrain's economic and social infrastructure are well developed. The country has a highly advanced transportation system, with good roads linking most of the country. Bahrain International Airport began jumbo jet service in November, 1971. There is an earth satellite station which pro- vides reliable international telephone and telex service. The major port in Bahrain, Mina Sulman, has a deep-harbor and free transit zone, providing berthing facilities for six ocean-going snips and preparation is underway to enlarge these facilities. Domestic electricity supply is available to prac- tically every citizen, but industry needs are growing fast. Foundation work began in 1972 on a new major electric power plant combined with water desal- ination for the first time. According to the 1971 census, enrollment in prim- ary schools in Bahrain for those between the ages 6-13 years was 74 percent. Population per hospital bed was 238. It is also reported that about 80 per- cent of the births are in hospitals. iv. Bahrain was the first oil producer in the Southern Gulf; current production, however, is relatively low amounting to 26 million barrels in 1972, and has been declining since 1970. Also small are Bahrain's on-shore oil re- serves amounting to 375 million barrels, compared with 7,000 million barrels in Qatar and 20,768 million barrels in Abu Dhabi. Bahrain's on-shore oil re- serves are equivalent to about 12 years production at the current rate. Geo- logists expect no further discoveries of maior oil reserves on Bahrain island. In the offshore areas, however, oil has been found in the Abu Sa'afa field located between Bahrain and Saudi Arabia. Production began in 1966: reve- nues are to be shared equally by Bahrain and Saudi Arabia. Production of this field, which amounted to 34 million barrels in 1972, was growing ra- pidly until 1972 when it slowed down to 8 percent annuallv. Future growth rate iq PxnprtPd t-o bep inwer- amnunl-inf tn 3 nerrent annuiallv in 1974-75; with no further growth is expected in the years 1976-77.