Why Bahrain Should Immediately Fight Coronavirus Economically

2020-03-11 - 6:19 p

Bahrain Mirror (Exclusive): In parallel with efforts to combat the Coronavirus in Bahrain, the government is not making concrete efforts to combat the effects of the terrifying virus on the economy.

Fears that the novel virus will spread have so far had significant consequences, and the central bank's decision to cut interest rates has no direct impact on the performance of the commercial sectors in which Bahrainis work.

Sectors such as tourism, services and retail trade have been greatly affected due to the fears of citizens and residents of the virus spreading, with many of them now staying in their homes and only going out to buy basic supplies.

The situation became more complicated with the closure of the country's only land port to Saudi Arabia. Bahrain receives more than 200,000 visitors across the King Fahd Causeway every week. In January, more than 3 million people crossed the causeway in both directions.

Some figures estimate that 60% of shoppers in Bahrain pass through the bridge, while the Bahrain Stock Exchange says the Saudis' contribution to the market is 7%.

The purchasing power of Saudis is significant when compared to that of Bahrainis. The presence of permanent consumers from Saudi Arabia is considered one of the factors that has helped the government for years to withstand demands for higher wages.

Shoppers are absent from malls such as City Centre and Avenues, in addition to old markets and restaurants since the increase of Coronavirus cases and Bahrain's announcement suspending schools in support of health efforts in combating the virus outbreak.

"In addition to these efforts, the government needs to quickly consider possible solutions to save the Bahraini market. The emerging conditions have increased the recession that the economy is already experiencing. We are on the verge of a possible collapse," one trader told Bahrain Mirror.

"Many stores have closed their doors in malls and Al-Maared Street at the end of 2019. There is no doubt that many shops will shut down if this situation continues for two more months without interference from the government," he added.

Earlier this year, the government announced in partnership with four national banks the creation of a 100 million dinar liquidity fund to support the private sector to overcome its financial difficulties.

He went on to say that "it seems that the government needs to double this amount if it is keen to face the current crisis. It should also consider abolishing some fees and taxes imposed on small traders and consumers immediately."

The collapse in oil prices, at the moment of writing this report, has increased economic concerns. There is nothing to reassure the market in Bahrain: the economic situation is worsening, and the government which is struggling to restore fiscal balance is losing about half of its financial resources as the price of an oil barrel drops.

Arabic Version