MANAMA  - Bahrain's government aims to complete preparations by the end of this year to introduce value-added tax, as it seeks to diversify its revenues beyond oil and strengthen state finances, finance minister Sheikh Ahmed bin Mohammed al-Khalifa said on Wednesday.

Introduction of the tax has been held up partly by domestic political opposition. Last month, officials said the government would not go ahead with fresh austerity measures until parliament agreed on a new system to compensate citizens for a higher cost of living.

Sheikh Ahmed, speaking at an investment conference in Bahrain, said the government would work with parliament on VAT, which was not expected to hurt economic growth.

(Reporting by Davide Barbsucia; Writing by Andrew Torchia) ((andrew.torchia@thomsonreuters.com; +9715 6681 7277; Reuters Messaging: andrew.torchia.thomsonreuters.com@reuters.net))