Saudi economy can withstand pandemic: Finance minister

A man at a store in Riyadh. The Kingdom has firmly addressed the virus issue. (AFP)
Short Url
Updated 25 May 2020

Saudi economy can withstand pandemic: Finance minister

  • Mohammed Al-Jadaan thanks Saudi leadership for urgent decisions taken to deal with the coronavirus crisis

JEDDAH: The Saudi economy can withstand the coronavirus crisis despite the need to cut spending, Finance Minister Mohammed Al-Jadaan said on Saturday. 

“The Saudi economy is able to absorb the decline in revenues and to deal with the budget deficit,” he said, adding that the government “firmly addressed this crisis with all determination, while prioritizing the safety and health of its citizens and residents.”

Al-Jadaan said the government “also worked hard to provide people with their basic needs, secure the necessary resources for health care systems, financially and economically support those most affected by the pandemic, and re-prioritize spending under the current circumstances.”

He thanked the Saudi leadership for “its unlimited support, and for the urgent decisions taken by the government to deal with the coronavirus crisis, including the initiatives it had launched to protect the Kingdom’s economy and support the private sector, its enterprises, low-income individuals and investors.”

The Kingdom “also showed a great sense of responsibility and commitment by holding the extraordinary G20 Summit in the framework of its presidency of the group, and recommending an injection of $7 trillion into the global economy as part of the financial policies, economic measures and security schemes aimed at facing the social, economic and financial repercussions of the pandemic,” he said.

“Saudi Arabia called for the bridging of the funding gap, estimated at $8 billion, to discover and develop new diagnostic tools, treatments and vaccines, while also providing $500 million of the required amount.”

Al-Jadaan congratulated the Saudi leadership on the occasion of Eid, and asked God to bless the Kingdom, protect it from the pandemic, and maintain its security and stability.


Analysts urge Canada to focus on boosting the economy

Updated 06 July 2020

Analysts urge Canada to focus on boosting the economy

  • Canada lost one of its coveted triple-A ratings in June when Fitch downgraded it for the first time

TORONTO: Canada should focus on boosting economic growth after getting pummeled by the COVID-19 crisis, analysts say, even as concerns about the sustainability of its debt are growing, with Fitch downgrading the nation’s rating just over a week ago.

Canadian Finance Minister Bill Morneau will deliver a “fiscal snapshot” on Wednesday that will outline the current balance sheet and may give an idea of the money the government is setting aside for the future.

As the economy recovers, some fiscal support measures, which are expected to boost the budget deficit sharply, could be wound down and replaced by incentives meant to get people back to work and measures to boost economic growth, economists said.

“The only solution to these large deficits is growth, so we need a transition to a pro-growth agenda,” said Craig Wright, chief economist at Royal Bank of Canada. The IMF expects Canada’s economy to contract by 8.4 percent this year. Ottawa is already rolling out more than C$150 billion in direct economic aid, including payments to workers impacted by COVID-19.

Further stimulus measures could include a green growth strategy, as well as spending on infrastructure, including smart infrastructure, economists said. Smart infrastructure makes use of digital technology.

“We have to make sure that government spending is calibrated to the economy of the future rather than the economy of the past,” Wright said.

Canada lost one of its coveted triple-A ratings in June when Fitch downgraded it for the first time, citing the billions of dollars in emergency aid Ottawa has spent to help bridge the downturn caused by COVID-19 shutdowns.

Standard & Poor’s, Moody’s and DBRS still give Canadian debt the highest rating. At DBRS, Michael Heydt, the lead sovereign analyst on Canada, says his concern is about potential structural damage to the economy if the slowdown lingers too long.

Fiscal policymakers “need to be confident that there is a recovery underway before they start talking about (debt) consolidation,” Heydt said.

Fitch expects Canada’s total government debt will rise to 115.1 percent of GDP in 2020 from 88.3 percent in 2019.

Royce Mendes, a senior economist at CIBC Capital Markets, said the economy still needs more support.

“Turning too quickly toward austerity would be a clear mistake,” he said.