Arabian Gulf allies have provided Bahrain a "lifeline" to stabilise its economy and prevent a potential credit crunch with a $10 billion aid package but it needs to deliver on fiscal reform targets to ensure sustainable progress, analysts said.
The assistance to Bahrain will provide short-term relief to the smallest Gulf economy, help avoid a currency devaluation, meet immediate debt payments, dispel speculation on the currency peg to the US dollar and allow it borrow on international debt markets at cheaper interest rates, analysts said. The support, which is tied to fiscal reforms, will allow Bahrain to focus on implementing measures to rein in its budget deficit.
"This is an important lifeline for the Bahraini economy and should allow policy makers time to continue the implementation of the reforms necessary to restructure the economy," Tarek Fadlallah, chief executive of Nomura Asset Management Middle East, said. "In the short term it will restore confidence but Bahrain will still have to successfully implement additional reform measures to convince long-term investors."
Saudi Arabia, UAE and Kuwait said on October 4 that they have agreed to support Bahrain's financing plan and stimulate economic growth in a five-year aid programme. Bahrain issued a 33-page financial programme aimed at eliminating its budget deficit by 2022, reducing public spending overseen by six task forces, introducing a voluntary retirement scheme for government employees, improving efficiency in state expenditure and streamlining cash subsidies to its citizens.
"The conditional support could be the game changer for Bahrain's economy that markets and credit rating agencies have been waiting for," Ehsan Khoman, head of Mena research and strategy at MUFG Bank, said. "The conditionality of the support package will provide much needed relief for markets given that investors will take more comfort in the forward-guidance structure of reform execution."
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UAE, Saudi Arabia and Kuwait give $10bn to support Bahrain reforms
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Assistance by the Gulf countries will help avoid a currency devaluation that market-watchers fear could spill over to neighbouring oil-producing countries.
"It is in the interest of all GCC countries that the pressure on the Bahraini currency subside and that the peg to the dollar is maintained to avoid contagion or spillover effect," Garbis Iradian, Mena chief economist at Institute of International Finance, said.
The aid package will be a "vitamin supplement" to help revive the economy's health and is "the right start" in the road to recovery, Mazen Al Sudairi, head of research at Al Rajhi Capital, said.
However, the deep fiscal reforms required to rein in Bahrain's large fiscal and current account deficits could lead to weaker economic growth in the short-term, economists said.
MUFG Bank expects Bahrain's gross domestic product growth to decline to 1.5-2 per cent in 2018 and 2019 from 3.9 per cent last year.
"This is just the beginning of a tough journey," Mohamed Abdelmeguid, Mena analyst at Economist Intelligence Unit, said. "Growth in Bahrain is driven in large part by government spending, and any deep fiscal cuts will keep economic expansion in check at least initially."
The aid programme will only meet half of Bahrain's financing needs over the next years, with the rest financed predominantly through debt issuance.
Analysts warned against a slowdown in the pace of Bahrain's economic reform programme as oil prices rebound and Gulf financial aid pours in.
"Bahrain should not be complacent," Rami Sidani, head of frontier investment markets at asset management company Schroders, said. "They need to implement austerity measures and meet fiscal reform targets otherwise the situation is not sustainable."
Investor confidence in Bahrain is likely to be a "tale of two stories" where on one hand markets will welcome the aid package and confidence will be restored to the banks, Mr Abdelmeguid said. On the other hand, foreign investors will play "wait and see" until they are assured of the government's commitment to policy reforms, which takes time.
Long-term sustainable recovery means Bahraini authorities will need to reduce fuel subsidies, contain the public wage bill, rein in public spending, and introduce a five per cent VAT in 2019, said Mr Iradian.
"The focus of attention will now be on reform execution in line with the 'fiscal balance programme' to ensure that Bahrain’s operating model shifts to a more sustainable footing away from the reliance on hydrocarbons," Mr Khoman said.
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
Dubai Bling season three
Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed
Rating: 1/5
2020 Oscars winners: in numbers
- Parasite – 4
- 1917– 3
- Ford v Ferrari – 2
- Joker – 2
- Once Upon a Time ... in Hollywood – 2
- American Factory – 1
- Bombshell – 1
- Hair Love – 1
- Jojo Rabbit – 1
- Judy – 1
- Little Women – 1
- Learning to Skateboard in a Warzone (If You're a Girl) – 1
- Marriage Story – 1
- Rocketman – 1
- The Neighbors' Window – 1
- Toy Story 4 – 1
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
RACECARD
6pm: Al Maktoum Challenge Round-1 – Group 1 (PA) $50,000 (Dirt) 1,600m
6.35pm: Festival City Stakes – Conditions (TB) $60,000 (D) 1,200m
7.10pm: Dubai Racing Club Classic – Listed (TB) $100,000 (Turf) 2,410m
7.45pm: Jumeirah Classic Trial – Conditions (TB) $150,000 (T) 1,400m
8.20pm: Al Maktoum Challenge Round-1 – Group 2 (TB) $250,000 (D) 1,600m
8.55pm: Cape Verdi – Group 2 (TB) $180,000 (T) 1,600m
9.30pm: Dubai Dash – Listed (TB) $100,000 (T) 1,000m
My Country: A Syrian Memoir
Kassem Eid, Bloomsbury
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
MATCH DETAILS
Barcelona 0
Slavia Prague 0
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
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Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Company%20Profile
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BUNDESLIGA FIXTURES
Friday Hertha Berlin v Union Berlin (11.30pm)
Saturday Freiburg v Borussia Monchengladbach, Eintracht Frankfurt v Borussia Dortmund, Cologne v Wolfsburg, Arminia Bielefeld v Mainz (6.30pm) Bayern Munich v RB Leipzig (9.30pm)
Sunday Werder Bremen v Stuttgart (6.30pm), Schalke v Bayer Leverkusen (9pm)
Monday Hoffenheim v Augsburg (11.30pm)
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
The specs: 2018 Mercedes-Benz E 300 Cabriolet
Price, base / as tested: Dh275,250 / Dh328,465
Engine: 2.0-litre four-cylinder
Power: 245hp @ 5,500rpm
Torque: 370Nm @ 1,300rpm
Transmission: Nine-speed automatic
Fuel consumption, combined: 7.0L / 100km
Pathaan
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UAE currency: the story behind the money in your pockets
