Saudi Arabia implements urgent measures to mitigate impact of coronavirus on economy

Riyadh: The Saudi government is moving decisively to address the unprecedented effects and consequences of the COVID-19 , Saudi Minister of Finance, Acting Minister of Economy and Planning, Mohammed bin Abdullah Al-Jadaan, has said.

“The Kingdom is taking immediate measures to ensure the safety of its citizens and residents, and to address its fiscal, financial and economic impact,” he added, noting “the government has taken precautionary and strong measures to protect citizens and residents in the Kingdom, and to ensure the availability of immediate financial resources.”

In statements carried by the Saudi Press Agency, the minister said that the health and safety of the Kingdom’s citizens and residents “comes first in the priorities of government’s actions and that the government will avail all the required appropriations for the health sector, to provide and deliver the necessary health services for prevention, treatment and control of infection.”

In addition, the minister announced that “the government has prepared urgent initiatives to support the private sector, especially small and medium enterprises and economic activities most affected by the virus. The financial stimulus package of these initiatives reaches more than SAR70 bn, which consists of exemptions and postponement of some government dues to provide liquidity to the private sector thereby enabling them to manage continuity of their economic activities. In addition, SAMA has announced a package of SAR50 bn, to support the banking sector, financial institutions and SMEs.”

These initiatives run as follows:

-Exemption from expat levy for those whose Iqama has expired from now until 30 June 2020, by extending their Iqama for a period of three months without charge.

-Enabling employers to refund the fees of issued work visas that were not used during the ban on entry and exit, even if they were stamped in the passport, or extend them for a period of three months without charge.

-Enabling employers to extend exit and re-entry visas that were not used during the ban on entry and exit from the Kingdom for a period of three months without charge.

-Enabling business owners, for a period of three months, to postpone the payment of value-added tax, excise tax, income tax, and the submission of Zakat declarations and the payment of obligations due therefrom. The decision allows also to grant zakat certificates without restrictions for the period of fiscal year 2019, and to accept instalment requests to the General Authority of Zakat and Income Tax without applying the condition of advance payment. In addition, postponing the execution of services suspension procedures and financial seizure by the General Authority of Zakat and Income, and setting the necessary criteria to extend the postponement period for the most affected activities as needed.

-Postponing the collection of customs duties on imports for a period of thirty days against the submission of a bank guarantee, for the next three months and setting the necessary criteria for extending the postponement period for the most affected activities as needed.

-Postponing the payment of some government services fees and municipal fees due on private sector, for a period of three months, and setting the necessary criteria to extend the postponement period for the most affected activities as needed.

-Authorising the Minister of Finance to approve lending and other forms of financing as well as exemption from payment of fees and returns on loans granted until the end of 2020, under the Corporate Sustainability Program initiative.

-Forming a committee headed by the Minister of Finance and the membership of each of Minister of Economy and Planning, the Minister of Commerce, the Minister of Industry and Mineral Resources, the Vice Chairman of the National Development Fund Board of Directors and the Governor of the National Development Fund, and shall have the following duties:

-Identifying and reviewing incentives, facilities, and other initiatives led by the National Development Fund or any of its funds and banks, with the aim of mitigating the exceptional and unprecedented economic situation, in light of the implications of the coronavirus, the impact of the precautionary measures taken by the Kingdom’s government and the low oil prices.

-Setting the criteria of designing and applying initiatives and their details.

-Identifying the amounts that will be used to support these initiatives from the resources available at the funds and banks under the National Development Fund for this purpose and as needed.

The committee may conduct transfers between these funds and banks and the Saudi Export-Import Bank as needed. The committee may direct both, the Kafala programme and the General Authority for Small and Medium Enterprises, to develop the necessary initiatives to support the objectives during this exceptional period, and to support them from the available resources at the funds and banks under the National Development Fund as needed.

In addition, the government will use the tools available to finance the private sector, especially small and medium enterprises, in addition to strengthening support programs to mitigate the impact on the private sector and economic activities, and to ensure the promotion of financial stability. The government also confirms its determination in paying its obligations in accordance with their due dates will honor its payments, in addition to applying measures that maintain the financial sector soundness.

Al-Jadaan emphasised that due to the financial strength of the economy and efficiencies and improvements already achieved, the government has considerable ability to diversify sources of financing between public debt and government reserves to adequately tackle the emerging challenges. This allows positive intervention in the economy in the right way and at the right time, while limiting the impact on the government’s goals in maintaining fiscal sustainability and economic development in the medium and long term.

He also stated that some budget appropriations will be reviewed and reallocated to the sectors most in need in the current situation, including allocating additional funds to the health sector as needed. An emergency budget was also introduced to cover any costs that may arise during the developments of this global crisis.

Al-Jadaan stressed that the government’s focus is to make every effort to address the pandemic’s threats on health and community. “The government will also continue to improve the efficiency of fiscal and economic performance to better confront the impacts of the virus spread, in addition to preserving the fiscal and economic gains achieved during the recent period.”