Arabian Gulf aid a 'lifeline' to Bahrain but reform targets must be met, analysts say - The National

Arabian Gulf aid a 'lifeline' to Bahrain but reform targets must be met, analysts say - The National:

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."