Saudi Arabian stocks fell on the first day of trading this week after the Finance Minister of the Kingdom warned that the government was preparing to implement “painful” measures for propping up the oil-dependent economy.
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“The kingdom hasn’t witnessed a crisis of this severity over the past decades,” Finance Minister Mohammed Al Jadaan told state media channel Al Arabiya. “The Kingdom is committed to the task of sustaining public financing, and is committed to having enough financial strength to face this crisis even if it is prolonged. We have taken several steps both in relation to health, and in relation to financial measures in terms of reducing expenditure. Right now, we are looking at what we can do to reduce the deficit level. Certainly, there has been a significant drop in revenues, and we will likely see its impact in the coming quarters.”
Since the start of the year, Saudi Arabia’s oil revenues have slumped by more than half, Al Jadaan also said, because of the drop in oil prices.
Non-oil revenue has also been down since the start of the year. Foreign assets also fell, the official told the news channel, to $464 billion as of the end of March. This is the lowest foreign reserve level in 19 years.
Some of the measures considered by the government are more public spending cuts, a limit of $32 billion on how much of the foreign reserves the government can use to combat the economic fallout of the coronavirus, and more borrowing on international markets.
“We will continue to take loans, and we have seen a large demand on government debt securities, internally or externally,” Al Jadaan told Al Arabiya. “As per the plan we will take loans up to 220 billion [riyals], as per the conditions in the market and the available liquidity.”
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