Bahrain’s Gulf Arab allies, Saudi, UAE and Kuwait, met to review a financial support programme designed to help the country repair its finances and stave off a possible currency devaluation that could roil regional markets.
The finance ministers of Saudi Arabia, the UAE and Kuwait met with their Bahraini counterpart on Wednesday in the island-kingdom. They said their countries were “committed to backing Bahrain’s fiscal stability” and economic growth, according to the official Bahrain News Agency.
The ministers reviewed a report prepared by a joint technical team in coordination with the Arab Monetary Fund, BNA said. The AMF is an Abu Dhabi-based organisation modelled on the International Monetary Fund.
Bahrain’s economy, the smallest among the six members of the oil-rich Gulf Cooperation Council, has been hit hard by low oil prices since 2014.
Investors fear that without aid to help bolster low foreign-exchange reserves and cut ballooning debt, the small kingdom will be forced to abandon the dinar peg to the dollar, triggering speculation that its neighbours would follow suit.
Bahrain officials have repeatedly said they have enough reserves to maintain the peg.
Bloomberg News reported this month that the multi-year programme discussed between Bahrain and its allies would involve spending cuts and measures to increase non-oil revenue, including the introduction of a value-added tax.
Source Credit: Arabian Business