Kuwait inks financial aid agreement for Bahrain

DUBAI: Kuwait signed an agreement to support Bahrain’s economy as part of a series of fiscal reforms Bahrain has embarked on last year, Kuwait’s finance ministry said on Tuesday, formalizing a previously agreed package.

Kuwait, along with Saudi Arabia and the United Arab Emirates, pledged $10 billion in financial aid to Bahrain last year to rescue the country from a potential debt crisis.

The ministers of finance of Bahrain and Kuwait, as well as the Kuwait Fund for Arab Economic Development and the Arab Monetary Fund, signed a “multi-party cooperation framework” which “formalizes a previously agreed package for supporting the economic reforms and financial stability in the Kingdom of Bahrain,” according to the statement.

Bahrain’s international bond prices and currency have come under pressure this year as the kingdom runs fiscal and current account deficits partly caused by low oil prices.

Saudi Arabia, Kuwait and the UAE, 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.

A $10 billion package would be worth about a quarter of Bahrain’s annual gross domestic product and 28 percent of public debt, and cover over two years of state budget deficits according to International Monetary Fund projections.