Corona virus: Saudi Arabia announces significant cuts in spending and 'painful' economic decisions

Corona virus: Saudi Arabia announces significant cuts in spending and 'painful' economic decisions

Saudi Arabia has decided to cut its budget in light of the economic damage caused by the corona virus.

Saudi Finance Minister Mohammed al-Jadan said on Saturday that the corona virus had hit the economy hard and that tough and painful decisions would be made to deal with it. He said that all options are open to get out of this crisis.

In an interview with Al Arabiya TV, al-Jadan said that Saudi Arabia would make significant cuts in its budget.

He said the effects of the corona virus were evident in the second quarter of this year. Al-Jadan said that Saudi Arabia's financial affairs would be tightened so that everything would be under control.

The Saudi minister said that in addition to this, the cost of mega projects will also be reduced. Saudi Arabia, the world's largest oil exporter, has historically struggled with low oil prices.

In March this year, Saudi Arabia's central bank's foreign exchange reserves fell the most in 20 years.

The budget deficit fell to ڈالر 9 billion in the first quarter after falling oil prices. Al-Jadan had said in recent months that Saudi Arabia could borrow 26 26 billion this year to balance its foreign exchange reserves.

Saudi Arabia's financial authority said on Tuesday that Saudi Arabia's foreign assets had fallen by 464 billion in March. This is the lowest level in 19 years. Saudi Arabia says the outbreak was caused by a corona virus.

Saudi Finance Minister Mohammed al-Jadan said the next steps and decisions were being considered to make up for the loss. The Finance Minister said that apart from oil, the effects of the decline in revenue would be felt in the coming quarters.

"At the beginning of this year, the price of oil was 60 60 a barrel, and today it is 20 20 a barrel," al-Jadan said. That's a decline of more than 50 percent. "

How is Saudi Arabia fighting the corona virus?

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Saudi Arabia has also imposed lockdowns in most cities and curfews in some places to control the epidemic.

International flights are completely closed.

As a result, Saudi Arabia's non-oil revenues have been severely affected. People are at home and business is closed.

According to the Saudi finance minister, "economic activity has come to a standstill due to precautionary measures against the corona virus, which has affected earnings from sectors other than oil."

Such situations must be dealt with with God's will and wisdom and skill. We are looking for many ways to deal with this epidemic. The world has not seen such a situation in the 70 years since World War II. Such an epidemic has never been seen before on a global scale.

He said last week that the government would withdraw a limited amount of money from its financial reserves. It will withdraw a maximum of ارب 32 billion from its reserves. In return, the government will use its full borrowing capacity and borrow 60 60 billion.

He added: 'We will continue to borrow. Due to security, we have seen a huge demand for government loans. We plan to borrow 20 220 billion because of the market and the available cash situation.

Al-Jadan says that neither the Saudi government nor the rest of the world is going to return to its former economic status before the end of the Corona epidemic, especially as the effects of the epidemic affect economic activity. And on the supply system of goods.

'The move will be painful'

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On the current economic challenges facing Saudi Arabia, the Saudi finance minister said that Saudi Arabia's economic situation still depends largely on the purchasing power of the people and therefore they will maintain the people's ability to spend in the future. The state of the economy remained the same.

However, he 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 further strengthened. The government has been working in this direction for four or five years and trying to reduce the losses. But much remains to be done.

"We will cut costs," he said. The government's actions in this regard may be painful but they will be for the good of all. It will be for the good of the country and its citizens.

He said that in order to maintain public financial investment, investment would also be made in the health sector.

Plans pending

The finance minister said the government was considering delaying the completion of some projects.

"As a precautionary measure, we will reduce the cost of the projects," he said.

We will be careful about the cost of some of the major projects or programs under Vision 2030. This will reduce our costs.

The Finance Minister said that the government was also considering spending cuts for the second period but no action would be taken to affect the basic amenities of the people. Besides, the government has all the other options. She is considering these options and their implications. "We will make a decision based on that soon."