Saudi Arabia has allocated funding worth $670 million to pay for housing, road, power and water projects in Bahrain.

The agreement was signed yesterday (June 14) by Finance Minister Shaikh Ahmed bin Mohammed Al Khalifa and Saudi Fund for Development vice-president and board member Yousif bin Ebrahim Al Bassam, said a report in the Gulf Daily News (GDN), our sister publication.

It will finance four major new projects in Bahrain and is the second instalment of a $2.5-billion grant from Saudi Arabia, which was pledged as part of the $10-billion Gulf Development Fund.

The new projects include construction of 1,247 housing units at the Al Ramli government housing development costing $150 million; a Northern Road project worth $250 million; a new 220/66-kV electricity network consisting of several transmission stations costing $200 million; and a water distribution network valued at $70 million.

The Gulf Development Fund is managed and supervised by the ministerial committee for development and infrastructure, chaired by Deputy Prime Minister Shaikh Khalid bin Abdulla Al Khalifa.

In a statement issued by the Finance Ministry, Shaikh Ahmed said the cash injection would support the overall development process in Bahrain.

"The main priority of the Saudi Fund for Development is to support vital projects that make (up) part of the strategic planning of the Bahrain government," added Al Bassam.

After the outbreak of unrest in 2011, GCC countries announced $10-billion aid packages for both Bahrain and Oman, often described as a GCC "Marshall Plan".

The UAE, Kuwait, Saudi Arabia and Qatar agreed to finance development over a 10-year period.

Last August, it was announced that an estimated $5.3 billion had been allocated for different projects, mainly housing, electricity and water, expansion of Bahrain International Airport, health, sewage, roads and education.

At that time, authorities said tenders worth $2 billion had been awarded for projects, with another $3 billion worth of projects due to be awarded by 2014.

The GDN reported last week that work on the BD40-million ($106 million) Mohammed bin Khalifa Al Khalifa Specialist Cardiac Centre, in Awali, was starting, thanks to funding from the Abu Dhabi Development Fund.

Bahrain is relying on the GCC funding to push ahead with such projects despite a drop in oil revenues, which account for more than 80 per cent of national income.

As a result of lower oil prices, the country is facing a fiscal deficit of BD1.47 billion ($3.89 billion) this year and BD1.56 billion ($4.14 billion) next year, based on a draft budget drawn up by the government which is also seeking to overhaul the subsidy system to save money. - TradeArabia News Service