Gulf nations support Bahrain’s fiscal schemes

Bahrain’s public debt rose to 133% of GDP last year

Saudi Arabia, Kuwait and the UAE reiterated their support for Bahrain’s plans to balance its budget, a move expected to help their neighbour in the debt capital markets despite delays in plans to fix its heavily indebted finances.

The three Gulf allies extended a $10 billion aid package to Bahrain in 2018 to help it avoid a credit crunch.

Last month Bahrain said that due to the coronavirus crisis last year, it had postponed the target year for a balanced budget to 2024, and announced plans to hike a value-added tax to boost state coffers. The fiscal balance programme — a set of reforms aimed at balancing the budget — was linked to the pledged $10 billion.

The ministers of finance of wealthier Saudi Arabia, Kuwait, and the UAE met with

Bahrain’s finance minister on October 19 to discuss Bahrain’s progress in improving its finances.

“The ministers welcomed the efforts made by the government of Bahrain in implementing the Fiscal Balance Program, and the progress made by the government despite the challenges posed by the Covid-19 pandemic”, the three countries said.

“The Ministers affirmed their support to the Kingdom of Bahrains efforts in pursuing further reforms to enhance fiscal stability and strengthen sustainable economic growth.” Bahrain’s public debt climbed to 133 per cent of gross domestic product (GDP) last year from 102 per cent in 2019.