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Outstanding personal loans taken out by Bahrainis could be wiped out under an urgent proposal presented by five MPs yesterday.
The move, which is spearheaded by MP Mohammed Buhamood, aims to help ‘refresh the market’ crippled by the Covid-19 crisis by increasing spending power.
It has been referred by Parliament Speaker Fouzia Zainal to the financial and economic affairs committee for review before presentation next month when sessions resume.
“Bahrainis are already ground down with the huge burden of heavy expenses from the moment they begin with plans to start a family and then it goes on as life progresses,” said Mr Buhamood.
He told the GDN that he believes outstanding personal loans had now reached around BD2 billion in Bahrain, up from BD1.6bn in January.
The proposal comes two days after banks agreed to defer loan instalments until the end of the year.
“What starts with a small amount averaging BD5,000 for wedding expenses jumps to BD50,000 in 10 years as income no longer matches up,” Mr Buhamood said.
“People just top up their existing loans and most are taken out by middle-class Bahrainis. They only manage to breathe by repaying them in full when they retire at 60 with their end-of-service cash.”
Mr Buhamood said wiping out personal loans would help restore the spending power of people and stimulate a local economy badly damaged as a result of the Covid-19 pandemic.
“There are no visiting GCC shoppers, no tourists, business meetings or conferences taking place. In these circumstances, the market needs to be fully supported by Bahrainis spending their hard-earned money,” he added.
“This may be the only way forward for the next three years without Bahrainis being forced to take out further loans.
“This is why we see wiping clean personal loan amounts, currently standing at BD2bn, as the best way to help reduce the burden on Bahrainis and encourage much needed spending in the local economy.”
He believes the government could either opt to drop the loans through an executive order or repay an outstanding interest-free amount from its own funds.
“The mechanism of repayment is not an issue; other GCC countries have stepped forward to help out their citizens and we can too,” added Mr Buhamood.
“Leaving Bahrainis to borrow and borrow doesn’t help with anything – it just piles up owed payments for eternity.”
mohammed@gdn.com.bh
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