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Bahrain binocular

Bahrain’s economy shrinks, COVID-19 forces 23 sports facilities to close

Some 23 sports facilities announced suspending activities due to the accumulation of rents and debts on their owners. Gym owners complained about their inability to continue in light of the economic crisis that occurred to them due to the Coronavirus crisis and the accompanying government measures and restrictions that are still ongoing.

The head of the Association of Gymnasiums and Health Clubs, Abdullah Al-Morbati, confirmed that approximately 23 gyms would be announced for sale due to the accumulation of rents and debts on their owners.

Al-Morbati pointed out that they could not pay these debts due to the frequent closure of the halls, the weak revenues, and the lack of cooperation by real estate owners regarding the late rents.

He said that the operating cost of the gyms is very high, as rent constitutes the most significant proportion of the operating cost.

He pointed out that the revenues of gyms have decreased significantly since the beginning of the pandemic and the accompanying precautionary decisions to limit the pandemic.

The gyms were closed for more than six months in the first phase, after which they were closed intermittently.

As this affected gyms’ business, their revenues decreased, and they no longer cover their monthly operating costs, which amount to more than 4 thousand dinars per month in some halls.

Al-Morbati indicated that many owners of rental properties for gyms insist on collecting all the rents since the beginning of the pandemic.

Al-Morbati called on the government to intervene to resolve this troublesome file for the owners of halls, primarily since these projects represent the only source of livelihood for their owners.

He added that with their exit from the market, more than 20 families would be without a source of livelihood, as this will constitute additional pressures on the national economy, which seeks to recover from the effects of the pandemic.

Bahrain’s economy is impacted by many internal and external pressures, which have ravaged the aspirations of Bahrainis to live in prosperity comparable to living standards in the rest of the Gulf countries.

The new government restrictions to limit the spread of the Coronavirus have negatively affected dozens of tourism and commercial sectors.

These restrictions caused the layoff of thousands of daily workers from their jobs in private sector institutions in Bahrain.

In earlier times, employees, whom Bahraini Lakes spoke to, stated that the employers told them to abandon them before the contract expires between the two parties to the work on the pretext that the recent measures imposed by the authorities – and still are – have exacerbated the economic setback to their facilities. It is no longer able to provide workers’ wages as a result of the lack of financial income and the weak purchasing power of citizens.

Many factories and retail companies lost most of their activities. They witnessed a decline in their sales, which negatively affected their work and the movement of their employees, where it worked to eliminate thousands of jobs and reduce the number of its business units after it faced a significant decline in its sales.

While the people are sinking more and more into poverty and deprivation due to mismanagement and rampant corruption in state institutions, specialists warn of the reflection of the growing rates of poverty and unemployment on the social status of Bahraini families.

This week, the Bahraini government, mired in a chronic debt crisis, started talks with a group of banks to issue a proposed bond during the second half of this year.

The Bahraini government had issued international bonds worth two billion dollars last January.

These bond issuances come amid Bahrain’s budget recording a deficit of $4.2 billion at the end of last year, amid low oil prices and a decline in economic activity due to the Corona pandemic.

In a previous report, credit rating agency Moody said that debt-ridden Bahrain would need to attract additional capital, including through borrowing, to maintain its currency peg after a massive decline in foreign currency reserves with low oil prices.

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