RIYADH (Reuters) – Saudi Arabia will take strict and painful measures to deal with the economic impact of the coronavirus pandemic, the finance minister said on Saturday, adding that “all options for dealing with the crisis are open”.
“We must reduce budget expenditures sharply”, Mohammed al-Jadaan said in an interview with Al Arabiya TV, adding that the impact of the new coronavirus on Saudi Arabia’s state finances will appear from the second quarter of the year.
“Saudi finances need more discipline and the road ahead is long,” he said.
One measure would be to slow down government projects, including mega-projects, to reduce spending, he said.
The world’s largest oil exporter is suffering from historically low oil prices, while measures to fight the coronavirus are likely to curb the pace and scale of economic reforms launched by Crown Price Mohammed bin Salman.
Saudi Arabia’s central bank foreign exchange reserves fell in March at their fastest rate in at least 20 years, hitting their lowest level since 2011, while the kingdom slipped to a $9 billion budget deficit in the first quarter as oil revenue collapsed.
Jadaan said last month that Riyadh could borrow $26 billion more this year while it would draw down up to $32 billion from its foreign reserves to finance the deficit.
On Saturday Jadaan told Al Arabiya Saudi Arabia had used some revenue from investments to plug the deficit, and that the crisis presented investment opportunities.
Jadaan noted the country had introduced stimulus measures aimed at preserving jobs in the private sector and safeguarding the provision of basic services.
(Reporting by Lisa Barrington, Marwa Rashad, Ahmed Tolba and Samar Hassan; Writing by Lisa Barrington; Editing by Nick Macfie, David Holmes and Daniel Wallis)