$10bln fiscal bailout to Bahrain extended by GCC countries

A comprehensive package of reforms announced in October 2018 secured the kingdom’s long-term fiscal stability

  
General view of Bahrain World Trade Centre in Manama, Bahrain, June 20, 2019. Image used for illustrative purpose

General view of Bahrain World Trade Centre in Manama, Bahrain, June 20, 2019. Image used for illustrative purpose

REUTERS/ Hamad I Mohammed

MANAMA: Bahrain Fiscal Balancing Programme has been now extended for two years to 2024.

The government informed legislators during a high-profile meeting yesterday that the three GCC countries – Saudi Arabia, the UAE and Kuwait – handing over a $10 billion bailout on the condition of economic reforms, have agreed with the two-year extension.

Under the plan, Bahrain should balance annual revenues with spending.

“We surpassed the Fiscal Balancing Programme targets until February of last year before the pandemic struck,” explained Finance and National Economy Minister Shaikh Salman bin Khalifa Al Khalifa.

“This now means the initial target of 2022 needs to be extended to allow us be back on track.

“We will continue working according to the principles of the programme and that’s about reducing government expenditure and ensuring the recovery from the impact of the Covid-19 pandemic. That’s our priority.”

In normal circumstances, the programme should have eliminated Bahrain’s budget deficit by 2022.

A comprehensive package of reforms announced in October 2018 secured the kingdom’s long-term fiscal stability. It was centred on six pillars designed to align non-oil government revenues with economic growth.

“Sustainable development is required to reach the planned targets and that’s what we look for as we move forward,” added the minister.

National Assembly and Parliament Speaker Fouzia Zainal and Shura Council chairman Ali Saleh Al Saleh offered their support to help stabilise the economy and ensure citizens were not too badly hit by the measures.

Shura Council financial and economic affairs committee chairman Khalid Al Maskati said an agreement between both legislators and the government to reach the desired targets was necessary.

“We have to work on economic growth while protecting public benefits and this comes despite numerous challenges,” said Mr Al Maskati. “The Fiscal Balancing Programme has to continue on track under the new extension alongside economic recovery.

“Reaching an equilibrium between spending and revenues is vital to avoid any option that may directly affect citizens.”

Furthermore, Shura Council first vice-chairman Jamal Fakhro believes there is a chance to move on and concentrate on the next challenge.

“Overcoming Covid-19 has been a priority and now, with it being under grip, the focus can go back to stabilising the economy under a clear plan over the next three years,” he said.

“This comes as public welfare schemes need restructuring to serve the less fortunate.”

Bahrain Parliamentary Bloc president and financial and economic affairs committee member MP Ahmed Al Salloom said extending the deadline ensures the kingdom can make focused rather than rushed decisions.

“It gives time for new plans to reach an economic equilibrium after almost two years of dealing with the global Covid-19 crisis,” he added.

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