RIYADH: Saudi Arabia could borrow around $26 billion more this year and will draw down a maximum of $32bn from its reserves to finance a government deficit caused by lower oil prices and the coronavirus crisis, the Saudi finance minister said.
The world’s biggest crude exporter has the financial capacity to deal with the current slowdown in economic activity caused by Covid-19 containment measures, finance minister Mohammed Al Jadaan said yesterday.
“The kingdom has the fiscal ability to overcome this crisis ... we will get over this in a strong position, the kingdom has gone through and seen other, deeper crises in the past and survived them.”
Riyadh last month raised its debt ceiling to 50 per cent of GDP from a previous 30pc to finance a widening deficit caused by lower oil prices and the economic downturn caused by the pandemic, and this month borrowed $7bn in international debt markets.
It plans to cover most of its expected deficit through borrowing, which it estimates will reach a total of around $58bn this year.
Riyadh will also look to lower spending further, after having announced a nearly 5pc cut in the state’s 2020 budget in March.
“We are currently studying additional measures to reduce spending. Expenses related to travel, events and other activities as well as projects put on hold will lead to some savings,” Al Jadaan said.
The minister said last month that the budget deficit could widen to a maximum of 7-9pc by the end of the year, from an earlier projection of 6.4pc.
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