Manama
Banks in Bahrain must play a major role in helping the national economy recover from the global Coronavirus (COVID-19) outbreak and, to do so effectively, will need the ongoing support of all stakeholders, particularly the government, said a senior Bahrain banker.
Ahmed Abdul Rahim, who is the chief executive officer of Ithmaar Bank, a Bahrain-based Islamic retail bank, as well as the deputy chairman of the Bahrain Association of Banks (BAB), said this shared focus on economic recovery will help shape the Kingdom’s new, post-COVID-19 reality and pave the way for continued economic growth and prosperity.
“The Kingdom of Bahrain has earned glowing international praise and recognition, including from the World Health Organization, for its handling of the global COVID-19 outbreak,” said Abdul Rahim. “This was due, largely, to the quick and decisive leadership of the Government, as well as the full and prompt support of all aspects of the society,” he said.
“The recent decision to focus government support on the most affected industries in the private sector is another step in the right direction and, with focus now gradually shifting to addressing the economic impact of this outbreak, we must continue in this same spirit of decisive leadership and close collaboration,” said Abdul Rahim. “We must aspire to maintain this internationally-celebrated approach and continue to set a standard for others to follow,” he said.
“The decision to provide government-funded wage support exclusively to the twelve most affected private sector industries, for example, will direct aim where it is needed most,” said Abdul Rahim. “Although all industries were affected by the global outbreak, some industries were very badly hit. If these industries, some of which have been completely shut for months, do not survive the extended slowdown, then the overall economy cannot ever fully recover.
“It is important, also, to remember that trying to provide support to all affected industries will risk spreading available resources too thin, effectively robbing everyone of any real support,” he said. “The same logic is true for individuals,” said Abdul Rahim. “We are all affected, but some of us a lot more than others. To fully recover, we will need to focus our efforts on trying to help those who are most impacted,” he added.
“For our part, banks must recognize the important role we must play in helping ease the economy back to its earlier growth trajectory and, perhaps more importantly, to helping both individuals and businesses absorb and, ultimately, recover from the economic impact of COVID-19,” said Abdul Rahim.
“We must recognize the importance of actively supporting the communities in which we operate, and we must always remember that we are all in this together,” he said. “To play their role effectively, banks are, in turn, supported by the decisions taken by government and the Central Bank of Bahrain (CBB), the Kingdom’s banking and financial services regulatory, to protect the stability of national economy,” said Abdul Rahim.
“This included decisions to cut interest rates and to reduce reserve requirements. Together, these decisions provided banks the flexibility necessary to support national efforts to absorb the economic impact of the pandemic,” he said. “Bahrain is widely recognized as one of the region’s key banking and financial services hubs,” said Abdul Rahim. “This was further reinforced by the Bahrain’s handling of the economic aspects of the global COVID-19 outbreak, with the government quickly announcing far-reaching initiatives and the banking and financial services industry complying immediately,” he said.
“One such initiative was the six-month deferment of financing instalments,” said Abdul Rahim.
“This went a long way in helping both individual and corporate customers absorb the economic impact of the outbreak and, subsequently, avoid a dangerous economic downward spiral that would have had a catastrophic effect on the national economy,” he said.
“This same initiative however effectively eliminated liquidity from the banking and financial services industry, potentially stopping banks from being able to service their own financial obligations or, at the very least, dramatically reducing their ability to provide new financing for their clients,” said Abdul Rahim.—Agencies
