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Bahrain to receive second economic package from the GCC

      Published on Wednesday, 25 July , 2018      209 Views     
Bahrain to receive second economic package from the GCC

  • Bahrain Business

Bahrain, the GCC’s smallest economy, is set to receive support from Saudi Arabia, the UAE and Kuwait to ensure fiscal stability of its financial institutions as the Arabian Gulf state pressured by high external borrowings struggles to recover from a three-year slump in oil prices.

A new programme “designed to strengthen Bahrain’s fiscal stability”, will be announced by the three states, finance minister Sheikh Ahmed bin Mohammed Al Khalifa said in a statement carried by the state-run Bahrain News Agency on Wednesday. It did not give further details of the financial aid package or when it was expected to be announced.

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Meanwhile, a joint statement on the Saudi Press Agency by the trio said they were “in discussions with the authorities in the kingdom of Bahrain to enhance the stability of the financial situation”.

They will “consider all options to support Bahrain and to finalise an integrated programme … to support its economic reforms and fiscal stability,” the statement said.

This is not the first time the sovereigns in the GCC, which accounts for about a third of the world’s proven oil reserves, have come together to financially help their peers in the six-member economic bloc and other Arab nations. The GCC in March 2011 announced a $20 billion aid package for Bahrain and Oman to support their economies, create jobs and upgrade housing and infrastructure over 10-year period.

Bahrain, also the GCC’s smallest oil producer, saw finances take a turn for the worse amid the low oil price environment, forcing the government to raise debt in order to plug its budget deficit and maintain public spending. The country’s debt to gross domestic product ratio last year rose to 89 per cent and the International Monetary Fund expects it to climb to 100 per cent of the GDP in 2019.

Bahrain’s latest grant from the GCC will likely be in the range of “millions of dollars, not billions”, said Jasim Husain, an independent economist based in Bahrain.

“The support should bring about calm in the short term at least. Longer term requires economic reforms and sustained commitments from Saudi Arabia, the UAE and Kuwait,” he said.

Category Bahrain Business | 2018/07/25 latest update at 11:00 PM
Source : The National | Photocredit : Google
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