Coinciding with the issuance of the Custodian of The Two Holy Mosques approval to gradually reopen economic activities as of Thursday, 5 Shawwal 1441 AH, corresponding to May 28, 2020 AD, and the plan to gradually lift the curfew – as stated in the statement of the Ministry of Interior – His Excellency the Minister of Finance, the Acting Minister of Economy and Planning, Mr. Mohammad bin Abdullah Al-Jadaan said that these decisions represent a new stage in the face of the global pandemic crisis and towards a gradual return to economic activities in the Kingdom to its normal levels. The decisions were taken after continuous coordination between the Ministry of Health and the concerned authorities, relying on a focused plan that seeks to balance between procedures for reopening economic activities and maintaining the stability of health and social conditions.
The Minister clarified that the government continues to implement its development plans that support growth and economic diversification and enhance the role of the private sector and support local content, whether through the state's general budget or through the role played by the development funds and the Public Investment Fund (PIF) to improve economic performance and enhance the return on the Kingdom's assets.
In this regard, the Minister highlighted that the government has increased – during the last period through the state's general budget – spending on urgent and necessary requirements to face the crisis, as it has significantly strengthened the financial allocations for the Health and related services sector. In addition, the government launched urgent support initiatives to mitigate the impact on the private sector, supporting the economy and to preserve the jobs of citizens in economic establishments, as previously announced. This required reducing spending in other areas to maintain the same level of spending that was approved in the state's budget, especially in light of the sharp decline in oil and non-oil revenues expected for this year that was affected by the crisis.
The government will continue to finance development projects through the state's general budget with a focus of attention towards continuing to raise efficiency in spending and maximizing economic and social returns. The Minister also affirmed the government's continued support to increase private sector opportunities in infrastructure projects. Which falls in line within the framework of enhancing the role and participation of the government supported private sector, which has been affected by the temporary suspension of many economic activities and to overcome the negative effects associated with the global pandemic crisis.
The Minister has also mentioned the vital role played by the development funds and PIF in diversifying and promoting economic growth and maximizing the return on assets of the Kingdom, noting that PIF continues to implement their investment plans, which included seizing a set of investment opportunities that had arisen under the current global financial markets circumstances. The Minister also referred to the implemented steps to enhance PIF's investment capacity, as an amount of SAR 150bn ($40bn) was transferred from Saudi Arabian Monetary Authority's (SAMA) FX reserves to the PIF exceptionally during March and April of this year.
While FX flows are on average within historical norms, a noticeable decline in FX reserves is due to the transfer, as PIF investments do not appear on SAMA published data. The Minister emphasized that the transfer to the PIF was carried out after a comprehensive consultation and in consideration of the adequacy of FX reserves. Maximizing the return on the Kingdom's assets will be positively reflected on economic performance and on public finances, and to reduce the negative effects of the Covid-19 pandemic. The Minister further indicated that PIF investment returns will be available to support the public finances when needed.
Regarding the decisions to reduce precautionary measures to resume economic activity, the Minister stressed the importance of all entities and individuals in adhering to health guidelines at every stage of the plan to resume economic activities. The return of activities to their previous level largely depends on the level of commitment by all. The Minister further noted that the move comes concurrently with developments facing the pandemic globally, as countries prepare to gradually restore the movement of economic activities and return to normal conditions, considering the difficulty of anticipating the duration of the global spread of the virus.
The Minister also noted that the decision to gradually return to economic activities was taken after continuous coordination with the Ministry of Health and related authorities, which will contribute to the gradual improvement of economic performance. The Minister also confirmed that Government efforts are continuing through work teams made up of experts in health, security, energy, economics, finance, human resources, commerce and other sectors. These teams assess periodically and comprehensively the health, social and economic dimensions of options for reopening economic activities.
Minster Al-Jadaan added: “The government succeeded in responding early to this pandemic by raising the capacity of the health sector and imposing strict health precautions that were met with great response and high awareness from citizens and residents. These precautions led to a significant slowdown in local economic activity, in conjunction with global economic activity. The government responded with a set of support initiatives that targeted private sector establishments, investors and individuals, and it is time to restore the movement to economic activity." Reaffirming the dedication of the Custodian of the Two Holy Mosques, with continuous monitoring from His Royal Highness the Crown Prince, in continuing the plans and initiatives to support and preserve economic gains and work to develop the local economy by all possible tools including supporting national industries and products, along with keeping in line with international developments in dealing with the pandemic.
His Excellency also stressed that following the guidelines for social distancing by all individuals and establishments is a major factor in avoiding a return to the suspension of economic activities if health conditions deteriorate - God forbid -.
The Kingdom was one of the first countries to take firm, preventive and precautionary actions to limit the spread of the Corona virus (COVID-19), and it has succeeded, by the grace of God, and then the continuous coordination and close monitoring of the wise leadership, providing all the needs and requirements during the preceding stage in dealing with the pandemic crisis significantly. The Kingdom is considered among the countries that recorded the lowest death rates among the infected in the world, the Kingdom also recorded very high recovery rates which is a result of the wise proactive policies that the Kingdom's government has taken during the past period, as well as the active cooperation and responsibility of both the citizens and the residents.
The government has also continuously sought to monitor the performance and support of various private sector activities, by launching several initiatives between direct support, delaying receipts from the private sector, exemptions, expansion of lending and wage support. All of which have been undertaken with the main objective of mitigating the negative effects of the precautionary measures taken on the private sector.