The Shura Council in Bahrain has approved a new law that will increase the deductions for the Future Generations Reserve to $5 per barrel of oil. This decision comes as a means to strengthen the country’s financial stability and to ensure resources for future generations. The Parliament had already given its approval to the bill earlier this month, highlighting the importance of this sovereign fund in times of crisis, such as the recent COVID-19 pandemic.
Khalid Al Maskati, a member of the Shura Council, emphasized that the reserve is designed to facilitate long-term growth while also allowing the government to respond effectively to urgent needs. The revised law will implement tiered deductions based on oil prices, starting at $1 per barrel for prices above $40 and increasing up to $5 per barrel for prices exceeding $120. These deductions are exclusively reserved for the Future Generations Reserve and will require legal approval for any adjustments or withdrawals.
The Financial and Economic Affairs Committee of the Shura Council underlined the importance of the reserve in maintaining Bahrain’s financial stability and safeguarding resources for future generations. They stressed that the reserve is more than just a fund, serving as a vital tool to protect the country against economic uncertainties and ensuring that resources are available when needed most. Members of the council also called for a broader approach to the reserve, advocating for tangible assets like land or gold to be prioritized over cash or liquid investments.
Abdulla Al Nuaimi, another council member, suggested that having tangible assets in the reserve will provide enduring value and support essential services without depleting government finances. The committee echoed this sentiment, stating that such assets could help preserve wealth over time and contribute to overall stability. During the COVID-19 pandemic, the reserve proved its worth by enabling quick responses to national challenges, highlighting its flexibility in times of uncertainty.
Overall, the increase in deductions for the Future Generations Reserve demonstrates Bahrain’s commitment to securing resources for the future and strengthening its financial stability. By linking these deductions to oil prices, the government aims to ensure long-term growth and effective crisis response capabilities. The reassurances provided by the Shura Council members underscore the importance of this sovereign fund in safeguarding resources for future generations and maintaining economic stability in Bahrain.
