Bahrain's Gulf allies considering $10 billion aid package to 'secure regional stability'

Gulf states are reportedly considering a five-year aid package for Bahrain to prevent currency devaluation throughout the region.

MENA

2 min read

The New Arab

28 September, 2018

Bahrain's economy has suffered since oil prices slumped in 2014 [Washington Post]

Bahrain could soon receive a five-year, multi-billion aid package by wealthier Gulf partners to help Manama to steady its finances, following years of low prices and unrest.

The $10 billion package - from Saudi Arabia, the UAE and Kuwait - would see Bahrain through a period in which it is carrying out fiscal reforms, according to anonymous sources cited by Arabian Business.

The sources said that the package, which has been under discussion for several months, may include deposits and low-interest loans.

At present, Gulf states are fearful that a potential devaluation in Bahrain's currency could force others in the region to follow suit. The package would allow Bahrain to maintain a currency peg.

Bahrain's finances have been hit hard by a slump in oil prices in 2014, and Manama has projected a state budget gap of $3.5 billion in 2018.

Aid has regularly flowed into Bahrain from Saudi Arabia, which wants to shore up support of the island's Sunni monarchy as it continues a years' long crackdown on dissent among its majority Shia population.

Despite it being the first Arab nation to strike oil, unlike its neighbours Bahrain has relatively small oil and gas reserves and has been one of the less wealthy GCC states.

In February, Bahrain became the latest Gulf country to announce it would introduce Value Added Tax, as the region looks to diversify beyond its oil-reliant income.