Bahrain is on the global stage again, earning a top spot as a destination for expats out of 689 countries.
But the country is facing the biggest fight for economic survival in its history.
Can anything be done to save this tiny island nation in the GCC?
Bahrain topped the global list for the second year running, according to Bloomberg quoting the annual Expat Insider survey by Munich-based InterNations, a network of 3.2 million expatriates.
The annual survey of more than 18,000 expats representing 178 nationalities covers everything from the cost of education and child care to family life, career prospects and perceptions of safety and political stability.
Bahrain high rankings for the ease of settling in, among other things.
Taiwan gained two spots to move into second place, with strong marks for job prospects and quality of life.
There were 66.2 million expatriates worldwide in 2017, according to a July research report by market researcher Finaccord. The company forecasts that the expat population will climb to 87.5 million by 2021.
Caught in a squeeze
Bahrain, like the rest of its GCC neighbors, is trying to diversify away from hydrocarbons.
Global intelligence site Stratfor said Bahrain has about 1.5 million people living on 771 sqkm of islands and until the discovery of oil on the islands in the late 1920s, national income was primarily dependent on dates (fruit) and pearls. Today its economy relies heavily on oil and natural gas.
On April 4, Oil Minister Mohammed bin Khalifa al-Khalifa revealed that Bahrain’s recently discovered oil and gas field, Khaleej Al Bahrain, holds an estimated 81.5 billion barrels of oil and 390 billion m3 of associated gas in place. Bahrain’s current oil and gas reserve numbers sit at 125 million barrels of oil and 92 billion cubic meters of gas.
“The country hopes that it can eventually produce about 200,000 barrels per day (bpd) from the field — a major increase considering that Bahrain currently produces just 45,000 bpd from its other field (though it receives an additional 150,000 bpd from the Abu Safah field it shares with Saudi Arabia),” said Stratfor.
Bahrain has also become strained under the weight of public subsidies, and now faces growing debt problems on the back of low oil prices from 2014 to 2017, with public debt reaching 89% of its roughly $33 billion GDP in 2017, while fiscal deficit reached 13% of GDP.
The International Monetary Fund (IMF) forecast that public debt could reach 100 percent of GDP in 2019.
The country is also facing low foreign currency reserves, highlighted when the country declared in June 2018 it had enough to cover only 1.5 months of imports.
“ These are among the reasons the UAE, Saudi, and Kuwait agreed this year to a vague program of “supporting Bahrain’s fiscal stability,” said Stratfor.
Bahrain gets a reprieve
Bahrain raised $500 million from a private placement of bonds with five regional banks, as it negotiates crucial financial support with its Gulf Arab allies, reported Bloomberg.
“The bonds were placed with Bank ABC, Emirates NBD PJSC, Kuwait Finance House KSCP, Noor Bank PJSC, and Sharjah Islamic Bank,” according to people with knowledge of the matter telling Bloomberg.
“For Bahrain, the funds also give officials time to agree on the details of the aid package with Saudi, the UAE, and Kuwait.”
The media said that talks are making progress on a multi-year program that would involve spending cuts and measures to increase non-oil revenue.
Bahrain in March raised $1 billion in Islamic debt.