Bahrain Mirror (Exclusive): Bahrain Mirror reported (December 7, 2020) sources saying that the countries supporting Bahrain informed the latter of postponing the payment of an installment scheduled within the framework of the Financial Balance Program, which amounted to $1.76 billion at the time.
The countries attributed their decision at the time to "the effects of the Coronavirus pandemic."
However, recent official data showed that Kuwait is the only country that has fulfilled its financial obligations under the Financial Balance Program, while Saudi Arabia and the UAE have not paid their share set forth by the program.
Commenting on the public debt account for the year 2021 in December of that year, the Ministry of Finance said that the funds that the government received from Kuwait as part of the financial balance program were categorized as deposits, not loans.
The Ministry did not indicate that any sums had been received from Saudi Arabia and the UAE.
A source in the Ministry of Finance confirmed to Bahrain Mirror that Saudi Arabia has actually stopped pumping cash into Bahrain since the outbreak of the Coronavirus pandemic.
"I think that the issue has something to do with Finance Minister Muhammad Al-Jadaan's recent statements regarding the conditions that Saudi Arabia has been imposing for providing aid," the source added.
Saudi Finance Minister Muhammad Al-Jadaan said on Wednesday (January 18, 2023) that his country had adopted a new approach regarding helping friendly countries and allies, revealing that said support is based on the implementation of conditions and economic reforms similar to what is being carried out by Riyadh.
Al-Jadaan said, during his participation in the World Economic Forum in Davos in Switzerland, that the Kingdom "used to provide grants and aid to its allies directly without conditions, and it seeks to change that," adding that Saudi Arabia urges countries in the region to carry out reforms.
The source further stated that Saudi Arabia has replaced direct cash grants for Bahrain with projects and investments.
He said that Saudi Crown Prince Mohammed bin Salman told his counterpart Salman bin Hamad (December 2021) that his country is ready to invest $5 billion in development projects.
"That was perhaps the turning point in terms of aid given to Bahrain," he added.
As for the reasons behind this decision, he said, "This may be related to the failure of Bahrain's announced plan to achieve financial balance."
Saudi Arabia expects the countries, which receive Riyadh's aid, to implement deep reforms similar to Riyadh's.
Saudi Arabia had imposed structural reforms in a number of sectors, in addition to making financial settlements with princes and businessmen who had taken advantage of their influence to achieve illegitimate gains.
Saudi Arabia launched (November 4, 2017) a campaign of legal prosecutions against a number of senior state officials, ruling family members, and economic figures on charges of corruption, in what is known as the Ritz-Carlton case.
The campaign ended with summoning 381 people, making compromises with 87 and referring 56 to the Public Prosecution. Saudi Arabia announced that it had recovered 400 billion riyals (40 billion Bahraini dinars) for its treasury.
In this regard, a financial analyst told Bahrain Mirror that senior members of the ruling family can help the country's finances without the need for similar legal procedures.
He went on to say that, "With the deterioration of the country's financial situation, everyone was expecting that King Hamad bin Isa Al Khalifa, for instance, would give up a share of the huge amounts of money he inherited from his father, and the same applies to the inheritance of Khalifa bin Salman, not to mention the assets and white lands."
"I do not rule out that Saudi Arabia's measures are related to the wealth of senior members of the ruling family in Bahrain," he added.
Regardless of the reasons that prompted Saudi Arabia to stop direct financial grants to Bahrain, the ruling family in Bahrain has not taken any measures to help the country's finances. They instead have exacerbated the public debt to fund their own projects.