Saudi Arabia expects its budget deficit in 2020 may expand to nine percent of the country’s GDP being a result of the price collapse in the oil sector and losses to businesses as a result of the spread of the Covid-19 virus. Earlier, the expected deficit was not more than 6.5 percent.
As the potential economic effects are foreseen to be increasingly negative, the Saudi Arabian authorities have announced stimulus packages worth SAR 120 billion or $32 billion in total. The funds will be used in order to offset the impact of the virus on business activities. Around 60 percent of the funds will consist of exemptions and postponements of some government dues to provide liquidity to the private sector, thereby enabling them to keep up their economic activities, SteelOrbis understands. The other 40 percent will be used to support the banking sector, financial institutions, and small and medium-sized businesses.