The BD100 million ($264 million) Liquidity Support Fund would have a positive impact on Bahrain’s economic growth, non-oil GDP growth rate increases from 2.5 per cent last year to more than 4 per cent in 2020, said a top Bahraini businessman.



The fund will revive the economy through supporting viable companies facing short-term liquidity pressure, explained Yacoub Al Awadi, CEO of NGN, a global information systems company.



He stressed the positive impact of the liquidity support fund which will rescue companies from bankruptcy, generate job opportunities, attract investments and boost national economy.



“Pumping these relatively large funds into a small market, such as the Bahraini market, will revive real estate, retail, education, services, and other sector, in addition to offering various projects that companies undertake to implement,” said Al Awadhi.



“Global experiences have proven that the most effective solution to get out of the economic recession is for the state directly or through banks to pump money into the economy, just as it happened during the global financial crisis in the United States of America in 2008, when the US government saved giant companies from bankruptcy by giving them soft loans, and the American economy soon returned to growth and generating jobs again.” added Al Awadhi.



In this regard, Al Awadhi considered this decision confirms the Bahraini government ability to boost economy stimulation, raise growth rates and protect it from the global financial fluctuations.



Al Awadhi also stated that the liquidity support fund is an internal investment. He said: “Regional experiences have shown that the economy does not respond quickly to the required speed with government support and stimulus, as this government stimulus may take time for cash to circulate in the markets, but fast-moving and active economies in a small market such as the Bahraini market are experiencing a tangible recovery within a short period that is less than a year.”



Moreover, Al Awadhi confirmed that the availability of sufficient liquidity for companies that can finance main operations such as buying, selling, producing, paying for the obligations, and react to emergency situations such as accidents, sudden failures, or the repercussions related to country's economy, in addition to seizing unplanned opportunities to maximize gains, such as expanding products and branches and negotiating the purchase of an asset that is suddenly on sale.



He considered that the success of this experiment will lead to its recurrence in the future by pumping larger amounts into the national economy, and developing fund’s the mechanism to increase the value and number of loans. Large companies are capped at BHD 1 million and BHD 250,000 for SMEs, with a loan period of up to three years.



The success of the experiment will also lead to the entry of more banks that have significant financial liquidity that needs to be run in guaranteed loans, and reviving the economy will benefit the banks themselves, who will be active in their lending and borrowing activities. – TradeArabia News Service

