Minister of Finance and Acting Minister of Economy and Planning Mohammed bin Abdullah Al-Jadaan, confirmed that the kingdom’s government has reached advanced stages of implementing its plans under the Kingdom's Vision 2030, as it has continued to control the public finances, control the fiscal deficit and achieved the goals by the end of 2019. At the same time, it achieved its goals to increase non-oil revenues, which increased by 13% at the end of 2019.
This came during the virtual press conference, which was held today to talk about the most important economic developments in light of the implications of the Corona virus (Covid-19).
The minister indicated to that these results came as a result of work over a period of four years led by His Royal Highness Prince Muhammad bin Salman bin Abdulaziz, the Crown Prince, Deputy Prime Minister and Minister of Defense, as well as Chairman of the Economic and Development Affairs Council.
He added that "so we have good reserves of in foreign currency almost the third at the world level which enabled the government to face this crisis on a base of strength.
The minister indicated that with the beginning of the crisis, the directive of the Custodian of the Two Holy Mosques, King Salman bin Abdulaziz Al Saud was issued on the recommendation of His Royal Highness the Crown Prince to form several teams to deal with this crisis on the side of the Political and Security Affairs Council and the committee to deal with the health crisis and a series of decisions were issued to protect the human being, which is the first and primary concern for the government of the Custodian of the Two Holy Mosques, including citizens and expatriates, as he ordered to provide the necessary health care free of charge to all on the territory of the Kingdom.
On the economic and financial side, the Minister stated that a high committee has been formed under the chairmanship of His Royal Highness the Crown Prince with a large number of ministers as members to deal with this crisis, including taking precautionary measures and providing the necessary financing in the health sector to ensure that the health system has all the necessary supplies and protection and sufficient amounts to protect themselves and also deal with the health crisis and treat the affected, and the adoption of packages to help the economy and support the most affected private sector, and provide support for these facilities, with follow-up of the crisis developments and implementation of follow-up initiatives.
Al-Jadaan said that the unemployment insurance system was modified within 48 hours only, and the continuous support of the Social Insurance in the event of damage as it pays up to 60% of the employee’s salary in the private sector, at the same time in coordination with the Saudi Arabian Monetary Agency, so that banks do not deduct from the financing and financing products that employees took from the banks, according to the recommendation of the competent committee under the guidance of His Royal Highness the Crown Prince in providing the necessary financing.
The Minister revealed that the Ministry of Finance had received clear directives from His Royal Highness the Crown Prince to provide the Ministry of Health with requirements and provide them immediately, as 47 billion riyals were provided to the Ministry of Health, part of which was actually used, and it contracted to purchase supplies, including the requirements by the Global Health System and the Kingdom exerted great efforts to make sure that its citizens enjoy health protection, and orders were issued to the Custodian of the Two Holy Mosques to accelerate the payment of the dues of the private sector, and the Ministry of Finance previously announced the completion of payment of all dues of the private sector that arrived at the ministry during the period of not less than 30 days, and paid off more than 200 billion riyals for the private sector, where the ministry paid the dues of the private sector in excess of 23 billion riyals in a period of less than 30 days, indicating that 78% of the amounts was paid within a period of 30 days.
Al-Jadaan stated that more than 14 billion riyals is added to the funds to provide additional support to the private sector, and these efforts continue with this pandemic in providing support and a set of initiatives, noting the quick decisions taken by the government of the Custodian of the Two Holy Mosques, expressing his gratitude for the very great support that the private sector and citizens receive him the Custodian of the Two Holy Mosques and His Royal Highness the Crown Prince.
The Minister of Finance stressed that the Kingdom has shown the world that it can lead the G20 effectively, as decisive decisions were issued during the presidency of the extraordinary virtual summit of leaders of the G20 countries by the Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al Saud, with the aim of supporting the global economy during this crisis, as a result the G20 country committed itself to provide $5 trillion to the world economy, and the poor countries.
The Minister of Finance pointed to the Custodian of the Two Holy Mosques order to invite the countries of the G20 and the entire international community, civil society institutions and the private sector to support the Kingdom's initiative that is aimed at bridging the gap and financing global health organizations that need almost $8 billion in immediate support to confront the Coronavirus pandemic, and to conduct the research the world needs to confront this pandemic, so the Custodian of the Two Holy Mosques ordered to contribute $500 million, as support from the Kingdom, dedicated to international efforts to combat this dangerous virus that has become an preoccupation for the whole world, and continued through its leadership with the G20 countries to mobilize support for this initiative.
The Minister also drew attention to the Kingdom's various initiatives, including the order of the Custodian of the Two Holy Mosques to provide humanitarian assistance to Yemen worth 25 million.
On the measures to reduce spending in the public sector or development projects, the Minister referred to the announcement by the government several weeks ago on measures to redistribute government spending to ensure that it is spent on the most necessary needs, especially in light of this crisis, and in a manner that ensures achieving the greatest impact for the benefit of the citizen and for the benefit of the health sector that needs support from everyone.
The Minister of Finance said: "We are currently considering any additional measures at the level of government expenditures, to be deferred in accordance with existing precautionary measures." and pointing out the work of different centers and agencies, such as the Center of Spending Efficiency to consider any measures that can be taken to reduce government expenditures in a way that ensures the health sector is supported in a manner that increases the health and safety of citizens and expatriates.
The Minister pointed out the current challenges facing the Saudi economy by saying: "We know that the Saudi economy is currently facing a group of challenges, which are the Coronavirus pandemic and its huge effects on the economy, while the second challenge represents the decline in revenues as a result of this pandemic, based on that a part of government revenue comes from the private sector, which means that there is an economic activity related to government non-oil revenues, while the third challenge represents a wise dealings with the business of the oil sector.
The Minister stressed that these challenges and emerging ones that require verifying the way of spending in a way that can overcome these challenges, while the government remains committed to providing all the resources necessary to protect the citizen and ensure his health and safety, in addition to providing the support to the health sector to face this pandemic.
The Minister noted the government's commitment to provide real support to the private sector and its institutions, especially most affected ones, particularly the institutions that employ citizens, as we are very interested in preserving citizens' jobs.
On fears of domestic product's fall, the Minister of Finance pointed out that the reports of international organizations at the end of 2019 from the International Monetary Fund, saw that 170 countries around the world, including the Kingdom of Saudi Arabia, will witness growth in its economy, drawing attention to the recent reports of those international organizations that were published last week as they see that 180 countries will witness a contraction and a negative decrease in the local product.
He stressed that the Kingdom has two synonymous sides, the first represents a decision to reduce oil output, which will affect the domestic product significantly, and the domestic production will decrease, as a result of the reduction in oil production, similarly, the non-oil domestic product of the private sector is expected to decrease this year.
He indicated that this is not surprising, given the precautionary measures taken by the state to confront the coronavirus pandemic, because the greatest concern for our wise leadership is the protection of citizens, it will always remain at the top of its priorities, promising to continue supporting the private sector, in addition to the intention to study and seriously search for the sectors most affected, to ensure that the necessary support is provided.
Regarding the restructuring of public debt, the Minister of Finance said that the Kingdom has a clear strategy for managing public debt, and there is an independent center for public debt management, which maintains distinguished relations with investors in debt instruments issued by the government, pointing to the announced increase in debt issuance for this year that may reach to an additional 100 billion riyals for the amount of 120 billion riyals, previously announced, bringing the total to 220 billion riyals.
The Minister of Finance touched upon the financial solvency of the Kingdom and its ability to deal with the coronavirus crisis, based on the reforms undertaken by country during previous years, where it managed to control the deficit levels very significantly, while the reserve can cover what we need from the budget deficit, expecting to withdraw 110 to 120 billion riyals of reserves, which was previously planned in the budget.
He pointed out in this regard the increase in borrowing from the domestic market and the external market, indicating that the second issuance of debt instruments in the international market received a great demand in the past several days, which indicates its success, and that the three rating agencies emphasized the credit rating of the Kingdom with a stable future outlook.
The Minister of Finance concluded by saying that the Kingdom has gone through many crises that it has managed to overcome by diversifying the economy.
He added that the journey is still continuing, starting with a journey of financial control to control of the deficit and raising the efficiency of spending and all these factors help the government to face these shocks, but in the end the resources in any country remain limited and the government must work to use these resources to achieve the best possible return and the most possible impact, in particular the direct impact on the availability of citizens needs and the availability of medical supplies and health needs in light of this pandemic.