(Bloomberg) -- Bahrain's Gulf Arab allies met to review a financial support program designed to help the country repair its finances and stave off a possible currency devaluation that could roil regional markets.
The finance ministers of Saudi Arabia, the United Arab Emirates and Kuwait met with their Bahraini counterpart on Wednesday in the island-kingdom. They said their countries were “committed to backing Bahrain's fiscal stability” and economic growth, according to the official Bahrain News Agency.
The ministers reviewed a report prepared by a joint technical team in coordination with the Arab Monetary Fund, BNA said. The AMF is an Abu Dhabi-based organization modeled on the International Monetary Fund.
Read More: Bahrain Said to Make Progress in Aid Talks With Gulf Allies
Bahrain's economy, the smallest among the six members of the oil-rich Gulf Cooperation Council, has been hit hard by low oil prices since 2014. Investors fear that without aid to help bolster low foreign-exchange reserves and cut ballooning debt, the small kingdom will be forced to abandon the dinar peg to the dollar, triggering speculation that its neighbors would follow suit. Bahrain officials have repeatedly said they have enough reserves to maintain the peg.
“At this stage, it's still talk, there is nothing tangible,” said Mohieddine Kronfol, the Dubai-based chief investment officer for global sukuk, Middle East and North Africa fixed income at Franklin Templeton Investments.
Any aid package needs to come with “some funds behind it, some dollars that people can look at but also there needs to be credible plan,” he told Bloomberg TV.
Read More: Bahrain Is Said to Hire Lazard for Advice on How to Fix Finances
The yield on Bahrain's dollar-denominated bonds due 2028 fell two basis point to 8.1 percent as of 8:31 a.m. in London, according to data compiled by Bloomberg.
Bloomberg News reported this month that the multi-year program discussed between Bahrain and its allies would involve spending cuts and measures to increase non-oil revenue, including the introduction of a value-added tax.
--With assistance from Manus Cranny.
To contact the reporters on this story: Zainab Fattah in Dubai at zfattah@bloomberg.net;Zaid Sabah in Washington at zalhamid@bloomberg.net
To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net, ;Lin Noueihed at lnoueihed@bloomberg.net, Vivianne Rodrigues
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