Saudi Arabia, Kuwait and the United Arab Emirates (UAE) have signed an agreement to provide Bahrain with a $10 billion aid package to execute a reform programme to support the country’s fiscal crisis, Kuwait’s Al-Rai newspaper reported yesterday, quoting an unnamed Gulf diplomatic source.
“A Gulf decision at the highest levels was taken to start the execution steps for a programme to support the financial stability of Bahrain,” the source said, adding that the “respective Kuwaiti authorities have finalised the prerequisite steps for the execution of the programme in coordination with the Arab Monetary Fund.”
Bahrain’s international bond prices and currency have come under pressure this year as the kingdom runs fiscal and current account deficits partly caused by low oil prices.
The reform programme, the source pointed out, will include cutting the kingdom’s public expenditure and government waste, voluntary retirement for government workers and redirecting state subsidies.
“The programme is also set to look at increasing the non-oil revenues to drive economic growth and diversify the government’s income streams,” the diplomatic source added.
The agreement will be signed in the Bahraini capital of Manama after the finance ministers of the three countries complete their current visit to Jordan, where they are also concluding a financial aid deal to support the Jordanian economy, according to the Kuwaiti newspaper.