Bahrain’s Future Generations Reserve Fund has rebounded strongly with assets reaching $924 million by the end of 2024.
Finance and National Economy Ministry Finance Under-Secretary Yousif Al Humood assured Shura Council members yesterday that the fund remains secure, delivering annual investment returns ranging between six per cent and 8pc.
He stressed that the fund continues to grow under a conservative but effective investment strategy.
He also revealed that several income-generating projects linked to the fund are already operational and among them is a medicine factory, which is producing 17 types of injectable medicines, 15 of which have already been licensed.
“Twelve types are currently sold to Salmaniya Medical Complex, the BDF Hospital and regional markets,” he said, adding that the factory is expected to generate significant revenues by the end of this year.
Mr Al Humood also disclosed that an investment tower – another major asset under the fund – is scheduled for completion by May 2026.
“There is strong interest in leasing spaces in the tower,” he said. “This will provide an additional and sustainable revenue stream.”
Despite adopting a cautious approach, the fund is achieving annual investment returns of between 6pc and 8pc, which Mr Al Humood described as ‘high by conservative standards’.
“We invest very carefully,” he noted. “The fund’s assets are managed indirectly by some of the best global firms, while an all-Bahraini team of 15 experts oversees operations.”
Mr Al Humood also credited a revised contribution mechanism – shifting from a flat $1 oil revenue transfer to a sliding scale of up to $5 depending on prices – with helping to strengthen the fund’s position.
The remarks came as the Shura Council discussed and approved two reports by its financial and economic affairs committee on the audited annual reports and financial statements of the Future Generations Fund for 2022 and 2023, following reviews by the National Audit Office.
Committee rapporteur Dr Anwar Al Sadah stressed the strategic importance of the fund as a key state instrument for safeguarding national resources, protecting assets and ensuring a secure future for coming generations.
“The fund plays a vital role in preserving wealth and guaranteeing future generations a dignified life,” he said. “This requires protecting its assets and investing them wisely.”
According to the committee, total transfers from the Finance and National Economy Ministry to the fund reached $54.5m by the end of 2022, rising to approximately $92.4m in 2023.
Dr Al Sadah explained that 2022 recorded losses of about $71m, mainly due to the revaluation of investments amid exceptional global market volatility, tightening monetary policies and declining asset values. This contrasted with profits of around $51m in 2021.
However, 2023 marked a strong recovery, with profits transferred to the fund amounting to nearly $64m, reflecting improved market conditions and better performance.
“The results show a clear improvement,” Dr Al Sadah said, adding that the committee recommended continued diversification of investment portfolios and balanced geographic allocation to maximise returns and reduce risk.
On operating expenses, Dr Al Sadah said costs declined to $5.5m in 2022, down from 2021 levels, before rising to $6.1m in 2023, an increase of 9.5pc.
He said the committee called for a review of operating expenses and administrative fees paid to investment managers, particularly given the presence of a specialised board to further enhance performance. It also suggested studying the possibility of paying expenses directly from the fund to ease pressure on the state budget.
Committee chairman Khalid Al Maskati stressed that presenting final accounts to the legislature is essential to enable effective financial oversight.
“Delays undermine the purpose of legislative scrutiny and weaken the council’s constitutional role,” he said, noting that the 2022 accounts reached the Shura Council 25 months after the government submitted it to MPs.
Mr Al Maskati praised ongoing efforts by the Finance and National Economy Ministry to develop operational mechanisms and enhance financial efficiency, noting that the fund’s cumulative value reached around BD768m by 2023 under a conservative investment policy.
Shura first vice-chairman Jamal Fakhro said that while losses were recorded in 2022, they were driven by market conditions.
“When reviewing performance over six years, the fund’s average annual return is very reasonable for a sovereign fund operating on a long-term basis,” he said.
Mr Fakhro also commended the fund’s management and transparency. He, however, asked if the $450m withdrawn from the fund during the Covid-19 pandemic would be treated as a loan or restored to the fund in the future.
The council unanimously approved both reports and agreed to forward its observations to the government.
mohammed@gdnmedia.bh
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