MPS have warned that Bahrain’s market could suffer a blow if a decision over bank loan deferrals is not taken today.
Twenty legislators led by Bahrainisation Committee chairman Ebrahim Al Nefaei have urged the Cabinet and the Central Bank of Bahrain (CBB) to defer loans until the end of the year.
They have now asked the new Cabinet to address the matter in its first weekly session today, a few days before banks start making cuts.
The MPs want the government to consider that Eid Al Adha is just days away, followed by back-to-school purchases and Ashoora – all involving heavy spending.
“The moment loan instalments are cut from monthly earnings, salaries and wages, the market will suffer a massive setback as most businesses will enter a sleep mode,” said Mr Al Nefaei.
“People will just sit at home and cut on spending with around 44 per cent of the income going towards repaying the loans,” he added.
“Some Bahraini families will not spend anything at all with money going towards paying the bills.”
In April, Parliament unanimously approved a proposal to defer all bank loan instalments until the end of the year for Bahrainis and local businesses and referred it to the Cabinet, which hasn’t responded yet.
Loans were initially deferred in 2020, from March until August, without bank charges. They were deferred four more times under optional deals in which interest was calculated from August 2020 until June this year.
Mr Al Nefaei said that the aim was to allow people and businesses to ‘properly recover’ from the effects of the Covid-19 pandemic.
Global repercussions of the Russia-Ukraine conflict are also causing concern, he added.
“Deferrals have helped the market by allowing cash to flow into businesses since the outbreak of the pandemic in February 2020.”
MPs are concerned that a rolling back of the decision would drastically impact citizens’ standard of living.
“Food prices have skyrocketed over the last few months,” claimed Mr Al Nefaei.
“People are struggling to make ends meet and it is particularly hard for low-income families and pensioners.
“So having loan repayments deferred for another six months is something that would certainly help citizens and businesses.”
MPs in April also unanimously approved extending bank loan instalments for up to 15 years to help people cope with a return of monthly deductions.
They want to more than double the maximum years of repayment from seven to 15.
Current loans in Bahrain have reached around BD12 billion.
mohammed@gdnmedia.bh
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