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Tue 8 Sep 2020 03:15 PM

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Saudi economy 'recovering' after coronavirus, oil price double shock

Finance chief Mohammed Al-Jadaan says 'exceptional talents' have helped 'prepare the national economy for recovery'

Saudi economy 'recovering' after coronavirus, oil price double shock

Al-Jadaan said Vision 2030 reforms provided a strong platform for Saudi Arabia to have a "quick and positive response" to the pandemic. Image: AFP/Getty Images

Saudi Arabia's economy is in recovery mode after facing one of its most challenging years for a century, according to Mohammed Al-Jadaan, the country's Minister of Finance and Acting Minister of Economy and Planning.

At the 15th virtual edition of the Euromoney Saudi Arabia Conference, Al-Jadaan said Saudi Arabia ended 2019 with positive momentum as Vision 2030 started yielding results.

Saudi Arabia assumed the G20 presidency in 2020, working with G20 leaders and other partners to support sustainable and inclusive growth.

But then in the first quarter of 2020, Covid-19 hit the world like a speed train, with significant impact, particularly on the most vulnerable. Various countries saw GDP fall by up to 20 percent, effectively losing 10 years of growth.

Al-Jadaan said: "The Saudi people were able to adopt and lead the charge, with exceptional talents that worked hard 24 hours a day to control Covid-19 and prepare the national economy for recovery."

Al-Jadaan said Vision 2030 reforms provided a strong platform for Saudi Arabia to have a "quick and positive response" to the pandemic.

Significant resources were redirected to the healthcare system, and King Salman decided to provide healthcare services free of charge not only to the Saudi nationals but also to residents and illegal residents.

The government delivered a SR218 billion package of support to businesses and the private sector while SAMA, the central bank, provided significant liquidity into the banking sector of approximately SR70 billion.

SAMA also injected another SR50 billion of liquidity into the banking system to enable banks and financial institutions to provide credit to the private sector.

Initial signs were positive as the economy re-opened. In 11 tourist destinations, room occupancy rates jumped to 85-90 percent while the success of the kingdom's privatisation program also saved SR15.7 billion of the government's expenditure, he said.

Saudi Arabia suffered from a simultaneous decline in oil and non-oil revenue this year as the global pandemic combined with lower energy prices to jolt the kingdom’s public finances. Officials have taken unprecedented measures in response, including tripling value-added tax.

The government could still face a budget deficit of over 13 percent of gross domestic product in 2020, according to the median of forecasts compiled by Bloomberg.

Al-Jadaan in May warned of "painful" and "drastic" steps to deal with the double shock of the coronavirus and record low oil prices.

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