Moderate Spending Proves Essential in Overcoming COVID-19 Pressures on Saudi Budget
Despite the growing debt and widening deficit gap, Saudi economists said that the Kingdom’s trends of moderate spending was vital to overcoming financial pressures caused by the coronavirus pandemic. It especially helped focus on healthcare and the economic revitalizing program.
The economists pointed out that official data recently announced about the country’s budget for the second quarter of 2020 revealed a decrease in government revenues within the context of maintaining financial strength and promoting vital development projects and the continuation of work in the private sector.
Dr. Abdul Rahman Baashan, head of the Shorouq Center for Economic Studies, told Asharq Al-Awsat that the policies and reforms undertaken by Saudi Arabia over the last few years has afforded the country enough leniency to absorb major shocks facing the global economy because of the coronavirus pandemic.
“Riyadh has launched more than 200 initiatives to support the economic, commercial and investment sectors, which represents a treatment for the effects of the drop in trade and economic activity, and thus contributed to declining revenues and an increase in the gap in deficit and debt,” Baashan said.
With this in mind, he believes that the decline in revenues and deficits in the budget during the second quarter of this year is natural in line with the measures taken by the Kingdom to face the challenges posed by the pandemic.
Baashan expects that the Kingdom will regain its ability to recover all the momentum related to commercial and investment activity gradually as more people recover from the virus and amid growing awareness among individuals.
Economic expert Khalid Ramadan said that the decrease in budget revenues by 49% for the second quarter of 2020 was expected due to the shutdown of many economic activities during the coronavirus lockdown.
This has led to the postponement of many projects and the lowering of spending, all to avoid a staggering deficit in the budget.
Ramadan added that moderate spending, which during the first half of 2020 amounted to 469 billion riyals, was the cornerstone of overcoming the coronavirus-imposed economic pressures and declining oil prices.