The $10 billion package was made available by Saudi Arabia, the UAE and Kuwait in 2018 to help avert a currency devaluation that could have reverberated across the region.
Thursday 09, May 2019
(Bloomberg) --Bahrain said it will receive about $2.3 billion this year from a five-year support package provided by its Gulf Arab allies as the island-Kingdom seeks to reduce its budget deficit and debt.
According to Bahrain’s Finance Ministry, the sum is roughly in line with the amount received in 2018.
The ministry’s announcement is the first that offers details about the aid package, which has helped slash Bahrain’s borrowing costs and restore investor confidence. After struggling to tap international debt markets at some point last year, Bahrain is now planning to sell bonds in the second half of 2019.
Bahrain will receive $1.76 billion in 2020, $1.85 billion in 2021 as well as $1.42 billion in 2022 and $650 million in 2023.
Under its fiscal balance programme, the government forecast a budget deficit of 3.4 per cent of gross domestic product (GDP) this year, compared with 6.4 per cent in 2018 and it sees the shortfall narrowing to 2.1 per cent in 2020
The three wealthier Gulf monarchies rallied to Bahrain’s aid after its finances came under pressure due to lower oil prices.
Bahrain’s announcement comes shortly after parliament passed the country’s budget, in which the government reconfirmed its commitment to subsidy reform. The kingdom has also introduced value added taxation (VAT) and a voluntary retirement programme to government employees below director level.
Salman bin Khalifa Al Khalifa, Bahrain’s Finance Minister, said, “The deficit is down over a third and annual GDP growth remains robust, Bahrain is demonstrating its commitment to delivering strong, sustainable economic growth.”
The deficit forecasts, however, are lower than the International Monetary Fund (IMF) estimates, which include extra-budgetary spending.
The IMF has predicted a shortfall of 8.4 per cent this year and 7.7 per cent next year.