DUBAI: Saudi Arabia has the financial capacity to deal with the economic downturn caused by the coronavirus pandemic, Finance Minister Mohammed Al-Jadaan said on Wednesday.
“We will get over this in a strong position. The Kingdom has gone through and seen other deeper crises in the past, and survived them,” he said.
Saudi Arabia could borrow as much as $58 billion this year on international capital markets, within existing borrowing guidelines, which would cover a deficit projected to reach 9 per cent of GDP, the minister said. It would draw down a maximum of $32 billion from reserves to help bridge the gap.
The Kingdom expects the pandemic lockdown to last a few more months but the impact on its first quarter revenues would be limited, Al-Jadaan said. A detailed breakdown of the financial position is expected to be announced in a few days.
He will also look to further claw back government spending after a 5 per cent reduction in March. “We are currently studying additional measures to reduce spending,” he said.
The economic challenge has been exacerbated by the low price of oil caused by a dramatic decline in global demand. Prices staged a modest recovery on Wednesday from the meltdown levels earlier in the week amid signs that the extreme volatility in global crude was abating.
Brent crude, the Middle East benchmark, rose 24 per cent to $24.18, back from its lowest level in two decades. West Texas Intermediate, the American standard, gained more than 50 per cent, though the price of $13.74 was the third lowest in WTI history.