Bahrain has not used UAE swap, in talks over F1 race, minister says

Bahrain's economy is expected to contract by 3% this year due to the ongoing conflict with Iran, according to S&P Global, amidst a fiscal deficit of nearly 8.5% of GDP.

Bahrain has not tapped its $5.3 billion currency swap agreed with the United Arab ​Emirates, the country's development minister told Reuters, and has also held ​talks about getting its Formula One Grand Prix back ‌on ​this year's race calendar.

Bahrain has been among the Gulf economies most exposed to the fallout from the Iran war, which erupted as the kingdom was trying to rein in one of the region's heaviest debt burdens. Renewed Iranian ‌attacks on the country over the past two days have underscored the difficulties. Credit rating agency S&P Global estimates the impact of the conflict will result in a 3% contraction of the economy this year, alongside a fiscal deficit of nearly 8.5% of GDP. "What has happened is unfortunate, not what we planned for," Bahrain's Minister of ‌Sustainable Development and Chief Executive of the Bahrain Economic Development Board, Noor bint Ali Alkhulaif, told Reuters in an interview on Tuesday just as tensions ‌began to flare again.

"It was meant to be a year of building the new Bahrain." A recovery is already well under way, though, she insisted. Big manufacturing and logistics firms have been finding alternative routes to the Strait of Hormuz, while the numbers of tourists coming from elsewhere in the region - which accounted for around 90% of last year's overall 15 million total - are "pretty much" back ⁠to pre-war ​levels. And despite concerns about a recent ⁠slump in its foreign exchange reserves that have left them at their lowest level since the COVID crisis at around $3 billion, Bahrain has not drawn on the UAE currency swap it agreed ⁠in April.

"Based on the information I have, it was not exercised," Alkhulaif confirmed on Thursday, adding that she was also a board member of Bahrain's central bank, which secured the ​swap. RACE AGAINST TIME Alkhulaif also said the country was trying to get the Bahrain F1 Grand Prix, which was cancelled along with Saudi Arabia's ⁠race back in March after the war broke out, back on.

Hostilities between the United States and Iran would first need to ease again, but Formula One sources say the most likely slot for ⁠Bahrain ​is the weekend of October 3-4, between the Azerbaijan Grand Prix in Baku and the Singapore Grand Prix on October 11. "There is the talks about maybe plugging in some of the races that were cancelled back into the calendar," Alkhulaif said. "No confirmation still on that, (but) potentially".

F1 experts say a decision will ⁠probably need to be made either way fairly soon to give the teams time to make the necessary arrangements. A reinstated race would be a welcome boost. ⁠The weekend typically attracts around 105,000 spectators, ⁠with bigger-spending international fans usually accounting for roughly 10% to 15% of that total.

With Ramadan also set to be earlier next year, Bahrain also looks set to reclaim the prestigious opening race of the 2026-27 season and host the normal ‌pre-season testing rounds, although ‌the situation with the war will again be crucial. (Additional reporting by Alan Baldwin; ​editing by Karin Strohecker and Toby Chopra)