Corona virus: Saudi Arabia to Take Tough Decisions
Saudi Arabia’s Finance Minister Mohammed Al-Zadan said that tough and painful decisions will be taken to deal with the damage to the economy caused by the corona virus infection. He said that all options are open to get out of this crisis.
In an interview to Al-Arabiya TV, Al-Jadan said that Saudi Arabia will cut budget expenses drastically. He said that the effect of corona virus will be clearly visible on the economy in the second quarter of this year. Al-Zadan said that Saudi Arabia’s financial matters will be tightened so that everything remains more disciplined.
Saudi’s Finance Minister said that the expenses of the mega project within the country will also be cut. Saudi Arabia, the world’s largest oil exporting country, has historically struggled with low oil prices.
Foreign exchange reserves in the central bank of Saudi Arabia have fallen the fastest in the last 20 years in the month of March. It has come down to the lowest level since 2011.
Since the fall in oil prices, there has been a budget deficit of $ 9 billion in the first quarter. Zadan said last month that Saudi Arabia could take a loan of 26 billion dollars this year to keep its foreign exchange reserves balanced. Saudi Arabia’s Monetary Authority said on Tuesday that Saudi Arabia’s foreign assets declined by $ 464 billion in March. It is at the lowest level in the last 19 years. Saudi says that this is due to the corona virus epidemic.
Saudi Finance Minister Mohammed Al-Zadan said that the next step and decision is under consideration to compensate for the loss. The Finance Minister said that the decline in oil and non-oil revenue will be seen in the coming quarter.
Jadan said, “Earlier this year, the price of oil was $ 60 per barrel and today it is $ 20 per barrel. This is a decline of more than 50%.
Saudi Arabia has also put lockdown and curfew in most cities to prevent infection. International air service is completely closed. Due to this also Saudi’s non oil revenue has been badly affected. People are in homes and all business is closed.
Saudi Arabia’s Finance Minister Al Jadan said, “The economic activity that has come to a standstill due to taking precautionary measures on the Corona virus has affected the rest of the earnings besides oil. And we have to compete with skill. We are trying to find many ways to deal with this epidemic. Such situation will happen in seventy years after the second World War. The world has not seen it. Such a pandemic was never seen on a global scale. “
He said last week that the government would withdraw a limited amount of money from its revenue reserves. It will extract only $ 32 billion from its revenue reserves. In return, the government will use its full capacity to borrow and issue a $ 60 billion loan.
He added, “We will continue to take loans. We have seen a huge demand for this due to the security of government debt. We plan to take 220 billion riyals loan according to the market and available cash position.” Al Jadan says that Saudi government or the rest of the world, they are not going to return to the economic situation before Corona, especially the way the epidemic has affected economic activities and supply chains.
‘The steps to be taken will be painful’
Regarding the current economic challenges facing Saudi Arabia, al-Zadan says that Saudi’s economic status still depends largely on the ability of people to spend in the market and therefore they will maintain the spending capacity of the people so that In the future, the condition of the economy should remain good.
However, he further said that more steps need to be taken in this direction so that it can be sustained. He said, “Public financial investment needs to be strengthened. The government has been working in this direction for four to five years and is trying to reduce the deficit. But a lot more has to be done. We will reduce expenditure. The steps taken can be painful, but they will be for the good of all. They will be for the good of the country and the citizens. “
He has also said to invest capital in the health sector in order to maintain public financial investment.
He has also said to invest capital in the health sector in order to maintain public financial investment.
Projects Hang in Balance
The Finance Minister said that the government is considering to complete some projects late. He said, “Under the steps taken as a precautionary measure, we will reduce the expenditure on the projects. We will take a delay in taking precaution on some important projects working under the 2030 vision or on the expenditure on certain programs. Our spending will come down. “
The Finance Minister said that the government is considering cutting spending on other items as well. Provided that basic services of the people are not affected. He said, “We are thinking about cuts in other areas as well but will not take any steps that affect the basic services of the people. Apart from this, the government has all the options, looking at those options and the implications that they have. We will soon formulate our plans based on this. “
