The Coronavirus pandemic is wreaking havoc on global economies and Bahrain was especially hit to worsen an already fragile economy that was bailed out in 2018 with a $10bn aid package by Saudi, the UAE and Kuwait.
And this despite a winning strategy to fight COVID-19.
Bahrain and COVID-19
Bahrain’s Ministry of Health reported that the Kingdom has conducted over 1 million COVID-19 PCR diagnostic tests as part of the “Trace, Test, Treat” strategy that has involved proactive testing on a scale well beyond other countries. This amounted to 675 tests per 1000 people with only 4.8% of positive cases. Bahrain has registered over a 92% recovery rate.
Bahrain yesterday recorded 353 new cases of Covid-19, alongside 350 recoveries and one fatality taking the death toll to 179. Of the new cases, 132 were among expatriate workers, and 221 were contacts of active cases.
No self-imposed quarantines
Bahrain announced on Wednesday it would cancel the home self-isolation protocol for all people entering the country but would continue conducting lab examinations for the coronavirus, state TV reported on Twitter.
Bahrain has recorded 3,482 coronavirus cases in total.
The decision was recommended by a national medical team on COVID-19 after statistics showed that over the period from July 1 to August 16, only 0.2% of the arriving passengers tested positive for the virus, Bahraini newspaper Al Watan reported.
Passengers, including citizens, expatriates and visitors, coming to Bahrain have to undergo the PCR test for detecting the coronavirus at their own expense on arrival and 10 days later. The test costs 60 Bahraini dinars ($159).
Passengers have to undergo a similar test on the 10th day of arrival in the kingdom.
Economy in tatters
The hospitality sector in Bahrain suffered from double-digit drops in occupancy since the virus took hold.
The latest Bahrain Economic Quarterly issued by the Finance and National Economy Ministry in June estimated gross value added in the hotels and restaurants sector fell by an annual 36%.
Statistics from Bahrain Tourism and Exhibition Authority for Q1 2020 point to a sharp 47% decline in the number of tourists and a 55% decline in total tourism expenditure.
Occupancy rates in five-star hotels fell to 43%, down from 53% a year ago.
In Colliers International’s recent MENA Hotels Quarterly Review, Manama’s occupancy has dropped by 45% in Q2 2020 compared to the same point last year.
Bahrain’s budget deficit has almost doubled in the first half of the year.
Figures released by the Ministry of Finance and National Economy showed that government revenues in the first half of 2020 fell to $2.4 bn, down almost 30% compared to last year. Oil revenues were down 35%.
The budget deficit climbed to $2.1bn, up 98% on the same period of last year.
According to rating agency Moody’s, general government debt is already running at just over 100% of the country’s GDP, while interest payments on that debt account for 20% of government revenue.
London-based consultancy Capital Economics expects Bahrain’s economy to shrink by 4.5% over the whole of this year.
Fitch recently cut Bahrain’s sovereign rating one step to B+, leaving it four levels below investment grade with a stable outlook.
The government sold $2 billion in dollar bonds in May, boosting foreign reserves that dropped to just $769 million a month earlier. Fitch forecasts the state budget deficit will widen to 15.5% of the GDP in 2020 from 4.6% in 2019.
The rise in this year’s budget shortfall, combined with a 12% drop in nominal GDP, will push the ratio of government debt to economic output to 130% in 2020.