Shura Council Votes on Future Generations Reserve Amendments to Boost Economic Resilience

TDT | Manama

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The Shura Council will vote today on significant amendments to Bahrain’s Future Generations Reserve Law, which are aimed at enhancing the country’s economic stability. The proposed changes, originating from the Council of Representatives, seek to increase oil revenue contributions to the fund, ensuring its growth and sustainability.

The Financial and Economic Affairs Committee of the Shura Council has already given initial approval to the amendments, which target Article (1) of Law No. (28) of 2006. These changes aim to strengthen the fund’s capacity as a financial safety net for Bahrain in times of uncertainty.

Ministry Support for Amendments

The Ministry of Finance and National Economy has endorsed the proposal, describing it as a practical measure to expand the fund’s resources. The ministry noted that the adjustments would increase deductions from oil revenues, particularly when prices exceed $40 per barrel, generating additional income for the fund.

“The proposed amendments will ensure the Future Generations Reserve remains a vital resource during periods of financial strain,” the ministry said.

The Ministry of Oil and Environment has also expressed its support. It highlighted the substantial international exports of petroleum products by Bapco Refining Company, which accounted for 82% of its sales in 2023. The ministry emphasized that the amendments would redirect a greater share of oil income to the fund during times of higher prices, building on current mechanisms.

A Pillar of Economic Resilience

The Future Generations Reserve is regarded as a cornerstone of Bahrain’s economic stability. During the COVID-19 pandemic, the fund provided $450 million to support the economy without compromising essential services.

“The proposed amendments will allow the fund to expand its investments and ensure its continued growth, helping Bahrain navigate unexpected economic shifts,” the Shura Council’s committee stated.

Implementation Timeline

If approved by the Shura Council and ratified by His Majesty King Hamad bin Isa Al Khalifa, the amendments will take effect in January 2025. The revised provisions will increase oil revenue contributions while excluding petroleum derivatives, addressing challenges related to their pricing and measurement.

Strengthening for the Future

As of the end of 2023, the Future Generations Reserve stood at approximately $769 million. The proposed amendments are expected to build on this foundation, allowing Bahrain to save more from its oil revenues and better prepare for future economic needs.

This pivotal vote underscores Bahrain’s commitment to securing long-term financial stability and ensuring the welfare of future generations.