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Financial Support Agreement
Financial Support Agreement
The Financial Support Agreement was signed between The Kingdom of Bahrain and the Kingdom of Saudi Arabia, the United Arab Emirates, and the State of Kuwait
Total Value of the funding program included in the agreement
billion USD2022-201810
Kingdom of Saudi Arabia United Arab Emirates Kuwait
Financial Support Agreement Details
The Financial Support Agreement, worth $10 billion, will cover50% of Bahrain’s total financing requirements up to 2022 which
is estimated to be $20 billion
The financial support will be utilised to
Finance the budget deficits until 2022
Fund maturing public debt
Fiscal Situation
42%58%
Oil sector
Non-oil sector
18%82%
Oil sector
Non-oil sector
2002 2017
Bahrain’s long-standing commitment to economic diversification has delivered tangible results across key sectors. However non-oil government revenues have not kept pace with economic growth.
Economic Diversification
2002 - 2017
Government Revenue 2002 - 2017
67%33% Oil revenues
75%
25% Oil revenues
2002 2017
BD 6.1 billion BD12.4 billion
BD 1.0 billion BD 2.2 billion
Economic Diversification and Government Revenue
Non-oil revenues Non-oil revenues
Growth of non-oil GDP in relation to non-oil revenues
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
92%
100%
118%115%
106%121%
306%
141%167%
121%126%
191%
228%
340%
258%
87%
246%
96%
269%
102%
410%
281%
116% 164%
102%
322%
127%
133%
358%
138%
380%
non-oil revenues non-oil GDP
Annual Budget Deficits
BD million
Average oil Price USD
219
547
(446) (460)
(31)(227)
(410) (455)
(1,517)(1,635)
(1,336)
(1,900)
(1,400)
(900)
(400)
100
600
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
62 80 111 112 109 99 5472 97 45 55
Successive budget deficits inrecent years have resulted in public
debt reaching 87% of GDP in the
first half of 2018
2008 2018
Public debt as a percentage of GDP
13%
87%
Increase in Public Debt
Restructuring government expenditures and revenues2015 – 2017
Streamlining government expenditure
Increasing governmentrevenues
Redirecting government subsidies towards eligible
citizens
BD 854 millionAnnual Fiscal Saving
worth
A balanced budget by 2022
Overall Objective of the Fiscal Balance Program
Targeted Outcomes
Further develop the provision of sustainable government services in
education, health and social services
Continue the provision of subsidizedelectricity & water services to
citizens in their primary residences
Continue funding development and infrastructure projects
Streamline and improve theprovision of government
services to citizens and investors
Enhance the efficiency and fairness ofdirect government support to citizens
Improve Bahrain’s credit rating thereby reducing the cost of financing for citizens
and investors
Create quality job opportunitiesfor citizens and ample support to
do business
Establish rules for the sustainable useof resources
The Fiscal Balance Program aims to strengthen the
Kingdom’s fiscal and economic foundations to ensure the
sustainability of resources for future generations
Building a solid foundation to guarantee sustainable economic growth and to utilize national resources in a way
that benefits citizens and future generations
Targeted Outcomes
BD 800 millionProjected impact of the Fiscal Balance Program
on an annual basis
Fiscal Balance Program Initiatives
Fiscal Balance Program Initiatives
First initiative
Reducing government operational expenditure
Second Initiative
Introducing a voluntary retirement scheme for government employees
Fiscal Balance Program Initiatives
A voluntary retirement scheme will be offered to civil servants, providing them with the opportunity to
contribute to the Kingdom’s economic growth through entrepreneurship or participation in the private sector.
2014 2018
BD
350million
BD
189million
2022
Fiscal Balance Program Initiatives
Electricity and water tariffs will be gradually adjusted while preserving benefits for Bahrainis in
their primary residences
Government subsidies for
Electricity and Water
Third Initiative
Balancing the Electricity and Water Authority’s expenditures and revenues by 2022
Fiscal Balance
Fiscal Balance Program Initiatives
Fourth initiative
Streamlining the distribution of cash subsidies to citizens in need
The consolidation and redirection of cash subsidies
towards eligible citizens is an important part of
ensuring fairness and improving quality of life
Fiscal Balance Program Initiatives
Establishing an internal audit unit at the Ministry of Finance
Establishing a Debt Management Office
Establishing a central procurement unit
Addressing cases highlighted inthe annual report of the National
Audit Office
Establishing a centralized efficiency unit at the Ministry of
Finance
Implementing a strategic plan to improve the Tender Board’s
services
Fifth initiative
Improving the efficiency of government expenditure
Fiscal Balance Program Initiatives
Reviewing government services and fees
Introducing Value-Added Tax in line with GCC Agreement
Streamlining and simplifying government processes
Align non-oil revenues with positive economic growth
Sixth initiative
Simplifying government processes and increasing non-oil revenues
Key Performance Indicators
-8.4%-8.3%-8.2%-8.3%-9.8%-10.0%
-13.0%
-3.6%-3.4%-2.0%
-4.8%
2.7% -0.1%-1.0%
-2.1%
-4.1%
-9.9%-13.5%
-0.3%
-5.2%
5.7%
2022202120202019201820172016201520142013201220112010200920082007
Without the implementation of the program With the implementation of the program
Deficit as a percentage of GDP
Debt as a percentage of GDP
Without the implementation of the program With the implementation of the program
104%100%
95%90%
82%84%85%85%87%
12345678910111213141516
20
15
20
07
20
09
20
17
20
10
20
11
79%
20
22
20
08
20
12
73%
20
13
62%
20
14
20
21
44%44%
20
16
36%33%
20
18
30%
20
19
20
20
13%16% 21%
For more information on the Fiscal Balance Program, please visit the Ministry of Finance website using the link below
www.mof.gov.bh
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