Saudi, Kuwait and UAE sign $10 billion aid deal

A Financial Support Agreement worth US$10 billion has been signed between the government of the Kingdom of Bahrain and the governments of the Kingdom of Saudi Arabia, the United Arab Emirates and the State of Kuwait, in coordination with the Arab Monetary Fund as an advisory body. The agreement will support the funding requirements of Bahrain’s Fiscal Balance Program, a comprehensive package of reforms adopted by the government of Bahrain that will secure the Kingdom’s long term fiscal stability and eliminate the country’s budget deficit by 2022.

Kuwait’s Al Rai newspaper earlier reported that the agreement will be signed in Bahrain after the ministers complete their current visit to Jordan, where they are concluding a financial aid deal for that country, the newspaper reported. “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 diplomatic source was quoted as saying. Saudi Arabia, Kuwait and theUAE, which are diplomatic allies of Bahrain, announced in June that they were in talks on a major aid package for the kingdom that would be linked to its progress in reforming its finances.

The $10 billion package would be worth about a quarter of Bahrain’s annual gross domestic product and 28 per cent of public debt, and cover over two years of state budget deficits according to International Monetary Fund projections. It would put no significant strain on the combined finances of Saudi Arabia, Kuwait and the UAE, which have hundreds of billions of dollars in their sovereign wealth funds and with Brent oil trading above $80 a barrel, have seen their own deficits narrow sharply or disappear in recent months.