Bahrain will receive before the end of this year, $2 billion from Saudi Arabia, UAE and Kuwait as part of the $10 billion pledged by the three regional allies to help the tiny kingdom avoid a debt crisis.
Two unnamed officials told Reuters that the $2 billion; a portion of last week-pledged $10 billion, will arrive before the end of 2018 and would figure in the 2019 budget.
One official added that another $2 billion scheduled for end of 2019 may be reflected in the budget, Reuters reports.
The $10 billion have been tied to fiscal reforms and will be released in installments.
The small Gulf kingdom has been on verge of financial collapse since 2014 due largely to the fall of the oil price. The country has been facing budget deficit since 2016. The deficit was equivalent to 14 per cent of gross domestic product (GDP) in 2017. Public debt was 90 per cent of the DGP and is expected to increase to 100 per cent next year according to the Financial Times.
As part of the aid package agreement, Manama released a 33-page fiscal plan. The plan proposes the improvement of the country’s finances and the abolition of the budget deficit by 2022.
The government as per the agreement will have to cut public spending, impose value-added tax and bring changes to the pension system.
A government spokesperson also indicated that some of the promised funds are in the kingdom’s coffers. He declined to give more details.