Shura approves reserve accounts

TDT | Manama

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The Shura Council yesterday approved the audited annual reports and financial statements for Bahrain’s Future Generations Reserve Account for the financial years ending 31 December 2022 and 31 December 2023.

It also agreed to forward the observations contained in the Financial and Economic Affairs Committee’s two reports.

Yusuf Abdullah Al Hammoud, Undersecretary for Financial Affairs at the Ministry of Finance and National Economy, told members the reserve’s assets reached $924 million in 2024.

He said amounts withdrawn during the Covid-19 period were fully covered through two sources: oil deductions transferred to the account and investment returns achieved over the same period.

Investment

Al Hammoud said the decree establishing the reserve tasks it with investing outside Bahrain and in non-dinar currencies, while domestic investment is handled by other bodies.

On a direct investment in pharmaceuticals, he said the factory produces 17 drug types, with around 15 licensed, and that products are being sold locally, including to Salmaniya Medical Complex and the military hospital, alongside sales across the region.

He said the ministry is working to exit the project in 2026 with favourable returns.

Al Hammoud also updated members on a tower project linked to the reserve, saying completion is expected in May 2026 and leasing has already begun, with interest from government and private entities in renting space.

Fees

On costs, he said fees rise because the account relies on external portfolio managers, and those fees increase as the size of investments grows.

He added that headcount had recently risen by about 15 employees, all Bahrainis.

“On portfolio liquidity, we are cautious and apply set measures. Part of our analysis is whether we can liquidate an investment within a short period, and we assess that before investing. Most of our holdings — shares, bonds and other assets managed through portfolio managers can be liquidated very very quickly,” Al Hammoud said.

Committee rapporteur Dr Anwar Khalifa Al Sadah said transfers received from the Ministry of Finance and National Economy for the reserve totalled $54,525,990 by the end of the 2022 financial year, while amounts received in 2023 were about $92.4 million.

Losses

He said 2022 recorded losses of about $71 million due to the revaluation of investments under the accounting basis used, compared with profits of roughly $51 million in 2021, linking the 2022 outcome to global market swings that reduced asset values and coincided with tighter monetary policy.

He said 2023 then recorded profits transferred to the reserve of about $64 million.

The committee said total assets rose to about $768.9 million at end-2023, up from about $614.3 million a year earlier, alongside an annual return of 8.4 per cent in 2023 after a negative return in 2022.

Expenses

It also referred to operating expenses of about $6.1 million in 2023, up from about $5.5 million in 2022, and said it was better to study paying those costs directly from the reserve account to ease recurring pressure on the state budget and clarify the account’s financial position.

It also noted receivables described as “indebtedness” of $13.6 million at end-2023, up from about $7.7 million a year earlier, and called for follow-up to collect sums due.

First Deputy Chairman Jamal Fakhro compared the reserve’s returns with those of a regional fund and said: “One fund in the region invests $110 billion, with an annual return of 1.5 to 2.5 per cent. We have reached returns of 9 per cent, several times that figure, which means we manage our money well.”

He also raised the $450 million withdrawn from the reserve in 2019 and said: “The law states the amount should be covered when the emergency financial repercussions end. It should not be covered from the annual deductions or from investment returns, but from other resources.”

Aim

Committee chairman Khalid Al Maskati said: “The aim of presenting final accounts to the legislative authority is to allow it to exercise effective financial oversight and to raise observations at the right time.”

He criticised delays in handling the 2022 accounts, saying the government sent them to the elected chamber in September 2023 and they reached the Shura Council in October 2025, about 25 months later, adding: “Delays in presenting the final account practically remove the legislative purpose of granting the Council the right to comment.”