MANAMA: Bahrain expects its economy to grow by 3 percent in 2011 and recent unrest has not prompted international banks to leave the Gulf state, the state news agency BNA quoted Central Bank Governor Rasheed Al-Maraj as saying Friday. The kingdom has no plans to change its interest rates which are in line with economic activity, he added. Maraj said there was no truth to "rumors" 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 percent from 3.4 percent following its worst civil unrest since the 1990s, making the non-OPEC oil producer the worst performer in the region. Bahrain is the only Gulf state projected to see a budget deficit in 2011 – unchanged from the previous forecast at 1.4 percent of GDP, the poll showed. Maraj said that the central bank's reserves of gold and hard currencies rose 11.5 percent 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 percent rise in spending on subsidies and other public expenditures. Bahrain has set its repo rate and one-week deposit rate at 2.25 percent and 0.50 percent respectively, which were last cut in September 2009.
