Financial Analyst Says "Royal Family Seniors Should Help Country's Finance"
2020-03-18 - 7:03 م
Bahrain Mirror (Exclusive): What options can the government offer to deal with the financial crisis it is facing with the Coronavirus epidemic? "Frankly, the only solution is that senior royal family members help the country's finances," a financial analyst told Bahrain Mirror.
Bahrain has not yet announced a financial package to help cope with the effects of the Corona epidemic outbreak, and the government has so far been satisfied with instructions issued by the Central Bank to banks to take into account distressed customers.
In contrast, Qatar announced a 75 billion riyal (BD 7.5 billion) financial package, while the UAE set a 10 billion dinar package, and Saudi Arabia 5 billion dinars.
"The government does not have sufficient solvency to provide an aid package like that announced by Qatar or other Gulf states," said the analyst who refused to reveal his name. "Public debt has reached a new record level since late last year (...) and the foreign reserves are at an alarming level."
He continues to say that "the collapse in oil prices has added a new factor to the crisis. I will honestly say the only solution is for senior royal family members to allocate an amount from their own accounts to help the country."
King Hamad bin Isa Al Khalifa and his uncle, the prime minister, own tens of billions of dinars collected over decades from oil and land grabbing, as well as overlapping political and commercial interests.
Commenting on the suggested solutions regarding fees and tax exemption, the analyst said: "It is not easy for the government to give up one of its financial resources. The government today is in very dire need of those funds (...) the solution is that these people provide money from their accounts."
The ruling family has never provided financial assistance to the country's treasury. It always turns to wealthier neighboring countries to help them overcome crises or build infrastructure.
"We can't predict whether the main supporters: Saudi Arabia, UAE and Kuwait will do it again. We hope they will help us," he says.
"We all know that the latest aid package was a financial agreement under which Bahrain will borrow $10 billion to be repaid by Bahrain after reaching financial balance in 2022," he adds.
The Bahraini government signed an agreement with the three countries on October 4, 2018 sponsored by the Abu Dhabi-based Arab Monetary Fund (AMF) to obtain financial assistance aimed at helping Bahrain achieve financial balance.
A government source later stated that the funds were goodwill loans that Bahrain would eventually repay.
This is the first time the Gulf States consider their loans to Bahrain due to be paid.
This may reflect the magnitude of the financial crisis the Gulf States have been witnessing since the oil price slump.
The analyst who works in helping companies outside Bahrain also comments by saying that "the falling oil prices, wage inflation and direct monetary aid don't even help a country like Saudi Arabia (...) the crisis forced the princes to pay old bills."
Saudi Arabia arrested princes in November 2017 in an "anti-corruption campaign" that ended with their release in exchange for paying the government.
"No one is asking for this in Bahrain, it's about the responsibility they should have, we are at a dangerous stage. They have to do something," he expains.