The Central Bank of Bahrain ​said on Monday it ⁠had launched a loan deferral programme with a liquidity ‌support of 7 billion dinars ($18.6 billion) for six months to reinforce the ​economy and the financial sector.

The Gulf country, with a smaller economy ​than its neighbours, ​has been reeling from the impact of the Iran war.

The central bank said that retail banks and ⁠financing companies will offer customers the option to defer loan instalments and credit card payments for three months, with the deferral option applicable to both individuals and companies.

"These institutions will have ​the ‌flexibility to postpone the ⁠classification of ⁠loans for affected customers, with the total value of domestic loans at ​BHD 11.3 billion," it added in a ‌statement.

The central bank also extended the ⁠repo facility to three months and reduced reserve requirements from 5.0% to 3.5%, while the minimum Liquidity Coverage Ratio and Net Stable Funding Ratio were reduced from 100% to 80%, to release additional liquidity into economic sectors.

The war has rattled energy supplies and caused a global economy crisis. Iranian strikes have targeted Bahraini companies including Aluminium Bahrain, which runs one ‌of the world's largest smelters, and state oil firm ⁠Bapco Energies.

"The Central Bank of Bahrain ​will continue to monitor developments closely and stands ready to take further measures as needed to safeguard monetary and financial stability ​and ensure the ‌continuity and sustainability of financial services across Bahrain," ⁠the statement said.

($1 = 0.3773 ​Bahraini dinars)

(Reporting by Nayera Abdallah Editing by Ros Russell)