The Pillar’s Logic
The government pillar of the Bahrain Economic Vision 2030 operates on a premise that distinguishes it from the economy and society pillars: the government itself must shrink for the vision to succeed. Where the economy pillar targets growth and the society pillar targets quality of life, the government pillar targets institutional efficiency. The state must do less, do it better, and do it at lower cost.
This is not a theoretical preference. Bahrain’s fiscal position demands it. The kingdom’s government expenditure has historically depended on oil revenue, and that revenue base is declining. With domestic oil production at approximately 40,000 barrels per day and a credit rating in the B+/B2 range, Bahrain cannot sustain an expanding public sector. The government pillar is, at its core, a fiscal survival strategy.
Five aspirations structure this pillar.
Aspiration 2.1: High-Quality Government Policies
The first aspiration calls for a fundamental shift in the government’s role — from service provider to policy architect. Bahrain’s government historically managed large portions of the economy directly: running companies, employing citizens, and delivering services through state agencies. The vision argues that this model is neither sustainable nor competitive.
Under Aspiration 2.1, government agencies are directed to develop evidence-based policy frameworks that set standards, create incentive structures, and define outcomes — while leaving delivery increasingly to the private sector. The Economic Development Board was established as the institutional embodiment of this shift, tasked with formulating economic policy and coordinating across government agencies.
Policy quality is measured not by activity but by outcome. The number of policies is less important than the measurable improvement in economic indicators, business formation rates, employment patterns, and citizen welfare.
Aspiration 2.2: A Productive Public Sector
Bahrain’s public sector has historically offered higher wages, greater job security, and shorter working hours than the private sector. This created a structural pull that drew Bahraini nationals away from private employment — directly undermining the economy pillar’s objectives. The government pillar addresses this through three mechanisms.
Outsourcing non-core functions. Government activities that do not require sovereign authority — facilities management, information technology, support services — are to be transferred to private sector contractors. This reduces headcount, introduces competitive pricing, and creates private sector employment opportunities.
Performance measurement. Government agencies are directed to implement output-based performance metrics, replacing activity-based evaluation. The quality and timeliness of service delivery, citizen satisfaction, and cost efficiency become the criteria for institutional assessment.
Headcount reduction. The public sector workforce is to be reduced over time through natural attrition, outsourcing, and hiring restraint. New government positions are to be created only where no private sector alternative exists. The savings generated by headcount reduction are to be redirected toward infrastructure investment and social services.
Aspiration 2.3: A Transparent Regulatory System
Regulatory transparency is identified in the vision as one of Bahrain’s most potent competitive advantages. In a region where regulatory processes in larger jurisdictions can be opaque, slow, and subject to discretionary interpretation, Bahrain positions itself as the jurisdiction where rules are clear, consistently applied, and publicly accessible.
The aspiration establishes several principles:
Zero tolerance for corruption. The vision explicitly names corruption as incompatible with the kingdom’s economic objectives. Transparency International rankings, anti-bribery legislation, and institutional accountability mechanisms are the enforcement tools.
Predictability. Businesses and investors must be able to forecast regulatory outcomes with confidence. Changes to regulations are to be signalled in advance, consulted upon, and implemented with clear transition periods.
Accessibility. Regulatory information must be publicly available. Licensing requirements, compliance obligations, and enforcement actions must be documented and discoverable. The Central Bank of Bahrain’s publication of detailed regulatory frameworks for all financial services represents the benchmark standard.
The regulatory transparency aspiration also targets the judiciary. Contract enforcement, dispute resolution, and commercial litigation processes must meet international standards of speed and fairness. Without reliable contract enforcement, investment commitments become speculative rather than structural.
Aspiration 2.4: Sustainable Government Finances
This is the most consequential aspiration in the government pillar. Bahrain’s fiscal position is constrained by declining oil revenue, relatively high government expenditure, and limited borrowing capacity. The kingdom’s credit rating — in the B+/B2 range from major rating agencies — reflects these pressures.
The aspiration targets fiscal sustainability through several mechanisms:
Revenue diversification. Reduce dependence on oil revenue for current government expenditure. Value-added tax discussions and pending corporate tax implementation at 10 percent represent steps in this direction. Bahrain does not levy personal income tax and has no capital gains tax, so the tax base is structurally narrow.
Expenditure discipline. Control the growth of government spending, particularly recurrent expenditure on wages and subsidies. The subsidy reform programme — restructuring universal energy and food subsidies into targeted social assistance — is a direct implementation of this aspiration.
Fiscal buffers. Build reserves that can absorb commodity price shocks without triggering austerity measures or borrowing at distressed rates. Bahrain’s fiscal breakeven oil price has historically exceeded market prices, creating structural deficits that the aspiration seeks to eliminate.
Debt management. Bahrain’s public debt as a percentage of GDP has risen significantly since the vision’s publication. Managing the debt profile — extending maturities, reducing borrowing costs, and stabilising the debt-to-GDP ratio — is a practical necessity rather than a policy preference.
Aspiration 2.5: World-Class Infrastructure
The fifth aspiration connects physical infrastructure to economic competitiveness. Bahrain’s 780 square kilometres of land area impose unique constraints — every infrastructure decision has outsized impact on the kingdom’s capacity.
Transport connectivity. The King Fahd Causeway, linking Bahrain to Saudi Arabia, is the kingdom’s most critical physical connection. Expansion plans aim to increase capacity and reduce crossing times. Bahrain International Airport’s modernisation programme supports the kingdom’s role as a regional transit point.
Telecommunications. High-speed connectivity is identified as essential infrastructure for financial services, business process outsourcing, and knowledge economy development. Bahrain was among the first GCC states to liberalise its telecommunications market.
Energy and utilities. Reliable, cost-competitive electricity and water supply underpins industrial operations, particularly Alba’s aluminium smelting, which is among the largest single consumers of electricity in the kingdom.
The infrastructure aspiration recognises that Bahrain’s small scale can be an advantage — infrastructure investments reach a larger proportion of the population and economy than equivalent investments in geographically larger jurisdictions.
Assessment Framework
The government pillar is the most difficult to measure because its outputs are institutional rather than financial. Policy quality, regulatory transparency, and government productivity do not appear in GDP statistics. The Vanderbilt Terminal evaluates this pillar through fiscal data, regulatory quality indices, ease-of-doing-business metrics, government efficiency indicators, and credit rating trajectories.