Saudi Arabia, Kuwait, UAE pledge Bahrain bail out

Saudi Arabia, Kuwait, UAE pledge bail out for cash-strapped Bahrain

Bahrain's wealthy neighbours are set to announce a support package to prop up the island state's economy.

2 min read

27 June, 2018

Bahrain is one of the less wealthy Gulf states [Getty]

Bahrain's Gulf neighbours are putting together a support package to prop up the island state's economy hit by low oil prices.

The trio will soon announce an "integrated programme" to support Bahrain's economic reforms and its fiscal stability, a joint statement said on Tuesday.

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.

On Tuesday, Bahrain's dinar plunged to a 17-year low against the US dollar as hedge funds dumped Bahraini bonds because of concern about rising public debt, Reuters reported.

The three wealthy Gulf states said in a statement sent to Reuters they are in discussions with Bahrain "to confirm their commitment to consider all options to support the kingdom of Bahrain and to finalise an integrated programme that will soon be announced to enable [it] to support its economic reforms and fiscal stability."

A statement released early Wednesday morning, carried by the state-run Bahrain News Agency, quoted Bahrain Finance Minister Sheikh Ahmed bin Mohammed al-Khalifa as saying the three nations are "set to announce a new programme designed to strengthen Bahrain’s fiscal stability".

The statement offered no details, other than expressing Sheikh Ahmed's "gratitude".

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.