Saudi Arabia’s economy is solid and capable of dealing with the budget deficit and the decline in revenues brought about by the coronavirus pandemic, the Kingdom’s Finance Minister Mohammed al-Jadaan said on Sunday.
“The Saudi economy is capable of absorbing the decline in revenues and to deal with the budget deficit,” he said in a statement congratulating the Saudi leadership on the occasion of Eid al-Fitr, according to state news agency SPA.
The minister praised the Kingdom’s immediate decisions taken to manage the coronavirus pandemic’s effects of the Saudi economy and to support the private sector, individuals and investors.
Saudi Arabia’s revenues dropped due to historically low oil prices and reduced economic activity amid lockdowns and curfews implemented to curb the spread of the coronavirus.
Its oil revenues fell 24 percent in the first quarter of this year to 128.771 billion riyals, while non-oil revenues fell 17 percent to 63.3 billion riyals.
The Kingdom slipped into a $9 billion budget deficit in the first quarter, and its central bank foreign exchange reserves fell in March at their fastest rate in at least 20 years and to their lowest since 2011.
To mitigate the impact of the COVID-19 pandemic on its public finances and economy, Saudi Arabia announced on May 11 austerity measures, including reducing expenditure by 100 billion riyals ($26.6 billion), tripling VAT and suspending cost of living allowance.