MPs yesterday unanimously approved a strategic move to bolster savings from the revenue of the Future Generations Fund.

The government has revised the fund’s framework to save more money from each barrel of oil exported. The new approach links savings directly to oil prices, ensuring that higher oil prices result in greater government contributions to the fund.

This initiative reflects Bahrain’s commitment to securing long-term financial stability for future generations by leveraging its natural resources more effectively. The changes are expected to strengthen the fund and increase its capacity to act as a financial safety net for the country.

Parliament’s financial and economic affairs committee chairman Ahmed Al Salloom praised the revised format, emphasising its importance in fortifying the fund’s resilience and ensuring sustained growth.

“The move aligns with Bahrain’s broader economic diversification efforts and long-term fiscal strategies, ensuring that the nation is well-prepared for a post-oil future.”

The revision has been welcomed by MPs as a forward-thinking policy designed to safeguard the nation’s wealth and provide a robust financial cushion for years to come.

Since January 2023, $1 is being saved from every barrel of oil exported if the international price is above $40 per barrel. The amount saved would be doubled to $2 if the price surpasses $80, and $3 if it shoots up to $120 per barrel or more.

MPs proposed a new revenue format which would see $1 saved from every exported barrel when the price is between $40 and $60, $2 when the cost is between $60 and $80, and $3 if it is above $80 and up to $100. The amount will rise to $4 for every barrel exported if the price is between $100 and $120, and $5 if it exceeds $120.

Backing the legislation, the Cabinet, however, suggested including only exported crude oil and not derivatives. It has also recommended the implementation of the legislation from January 2026, rather than from January next year.

In 2022, another amendment to the 2006 Future Generations Fund Set-up Law was approved by the National Assembly and ratified by His Majesty King Hamad. The bill, set to come into effect by the beginning of next year, will see $1.25 saved per barrel of exported oil, if prices ranged between $50 and $60, $1.50 if they were between $60 and $70 and so on, until it reached $3.

In August, the Cabinet approved a memorandum on the annual report and audited financial statements of the Future Generations Reserve Fund for the fiscal year ending December 31, 2023. According to the report, the fund’s total assets amounted to $769.9 million.

The Cabinet also heard that the fund achieved a total gross income of $64m and a positive return on average investments of 9.6pc. The government withdrew $450m from the fund to combat Covid-19 in 2020. The fund had $520.9m in 2020 which increased by 20.4pc to $627m in 2021.

The Shura Council is set to review the legislation and, if approved, it would be ratified by the King.

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