July 24, 2024

IMF addressed that the prompt action against the COVID-19 Pandemic aided the Saudi Arabia’s economy to progress

Image Credits: - Jad El Mourad/Pexels.com

As per the fund forecasts done by IMF, the Middle East’s largest economy and overall kingdom’s GDP will progress 2.1% this year and 4.8% in 2022.

The IMF announced that Saudi Arabia’s swiftest response to counterattack the deadliest and menacing COVID-19 Pandemic has aided the kingdom to curb the impetus on its national economy, that is now almost foreseeing to expand at 2.1 percent this year.

The Washington based global lender, IMF as well as announced in its statement that, the kingdom’s overall pace of recovery will further progress the forthcoming year as the largest Arab world Economy is all set to progress 4.8 percent in 2022, post witnessing a huge dip of 4.1 percent during the year 2020.

The IMF-global Washington based lender, also announced post the finishing of the Article IV Consultations held with Saudi Arabia in the kingdom’s capital Riyadh recently.

Saudi Arabia’s Minister of Finance, Mohammed Al-Jadaan, also further stated that: “The [IMF] statement reaffirms the success of the kingdom’s government in achieving positive results and tangible successes during the most challenging year for the whole world.”

In an overall as per IMF, following are the predictions regarding the Saudi Arabia’s Economy: –

  • In an overall kingdom’s Non-Oil or the Private sectoral Gross Domestic Product is all anticipated to expand 3.9 percent during this year in 2021 and 3.6 percent the forthcoming year, post witnessing a plummeting in the year 2020 of 2.3 percent.
  • Within June, the preceding year, the Saudi Central Bank had inserted 50 Billion Riyals ($13.3Bn) within financial institutions in order to power out the liquidity and the overall bank’s lending volume. It also added further 50Bn Riyals for upsurging the private arena’s progression as well as flung concessionary finance for SMEs of up to 13.2bn riyals, as well as loan assurances worth 6bn riyals.
  • However, the negative news comes from the oil economy of Opec’s major exporter is anticipated to plummet 0.5 per cent this year as production edges by the group and its allies to provision amounts remain in place. However, it is predictable to develop 6.8 percent in 2022 as they are detached. Oil GDP contracted 6.7 percent the preceding year as demand and budget weakened once movement boundaries to stem the spread of the virus were introduced.
  • The Nation has arisen to hurdles that include the Covid-19 pandemic, instabilities in oil rates, piercing economic swings, a weakening in global demand and receding growth, he added.

The kingdom is fortified with launching up of numerous Fiscal as well as Monetary stimulus initiatives the preceding year for assisting and offering up a robust foundation to aid its economy. The procedures were designed at defending the kingdom’s banking system and business entities, specifically micro, small and medium-sized enterprises.

Few amongst the stimulus actions remain in place while others are being moved back as the kingdom’s economy recuperates. The IMF further added that: “To secure [complete] recovery and spur stronger growth, policymakers need to carefully manage the exit from the remaining Covid-related support [measures], and that the private sector support programmes that SAMA and the banks have implemented during the crisis have provided important breathing space to SMEs … [and] the need to continue with the deferred payments programme should be assessed regularly based on the economic and financial situation facing SMEs.”

Under kingdom’s Private Sector Financing Support Programme, the central bank also unfurled about 30bn riyals to lenders and financing businesses, permitting the SME sector, the major employer in the kingdom, to delay repayment of loans.

The fund stated Saudi Arabia’s 2021 budget objectives to noticeably diminish its fiscal deficit, which enlarged in 2020 to 11.3 percent of GDP from 4.5 percent in 2019.

Even before the twin shockwaves of the pandemic and oil rates collapse, Saudi Arabia has been renovating its economy away from oil to cut its dependence on hydrocarbon revenue. The IMF stated that the kingdom should “linger the longer-term reform agenda under Vision 2030”.

Its core missions is narrowing the deficit to 4.2 percent of GDP this year, to some extent lower than the kingdom’s 2021 budget estimate, and transfer to a broader balance within the upcoming five years in 2026, “given the outlook for the global oil market and the fiscal policy plans of the government”.

The IMF commended further fiscal association but said this should be “carefully standardized” in the short term to ensure the recovery endures to be well maintained.



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