Bahrain sees 3% growth in 2011

Bahrain economy is expected to grow by 3 per cent in 2011 (FILE)

Bahrain expects its economy to grow by 3 per cent in 2011 and no international banks has left the Gulf state, its central bank governor quoted as saying on Friday.

The kingdom has no plans to change its interest rates which are in line with economic activity, the state news agency BNA reported Rasheed Al Maraj as saying.

Maraj said there was no truth to "rumours" that international banks had left after the "recent regrettable events."

"The (central) bank has issued eight licenses (for new financial institutions) since the beginning of the year and we deal with any request that meets the required conditions without delay," Maraj said.

Analysts in a Reuters poll slashed Bahrain's 2011 growth outlook in June for the second time in a row, to a median 2.7 per cent from 3.4 per cent.

Bahrain is the only Gulf state projected to see a budget deficit in 2011 -- unchanged from the previous forecast at 1.4 per cent of GDP, the poll showed.

Maraj said that the central bank's reserves of gold and hard currencies rose 11.5 per cent to 1.70 billion dinars ($4.5 billion) at the end of April from 1.53 billion dinars at the end of March.

Earlier in June, King Hamad bin Isa al-Khalifa approved a $16.44 billion budget for the next two years -- a 44 per cent rise in spending on subsidies and other public expenditures.

Bahrain has set its repo rate and one-week deposit rate at 2.25 per cent and 0.50 per cent respectively, which were last cut in September 2009.

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