Saudi Arabia’s Finance Minister Mohammed Al-Jadaan on Wednesday said that the kingdom would raise debt by SAR120 billion ($31.82 billion) and tap the same amount of cash from its reserves to combat the fallout of the COVID-19 pandemic and the collapse in oil prices.
This decision will increase Saudi Arabia’s total borrowing to SAR220 billion ($58.33 billion). The kingdom has already raised SAR100 billion ($26.52 billion) in bonds and loans. Despite the measures, Saudi Arabia’s economy is expected to shrink in 2020, according to Al-Jadaan in a press televised conference.
The coronavirus pandemic has put oil demand and price under massive pressure, hitting the kingdom’s economy hard. Saudi Arabia’s 2020 budget assumed an oil price of $60/barrel, and the IMF estimated the country’s fiscal breakeven price is $80/barrel. However, Brent crude was priced at $20.37/barrel on Wednesday.
The minister noted that healthcare remains Saudi Arabia’s top priority, but the government will evaluate the gradual resumption of business activities. The Crown Prince Mohammed bin Salman has set up a committee to ensure the health sector is adequately funded. As of April 22, Saudi Arabia had reported over 12,700 confirmed COVID-19 cases with 114 deaths.
