| SAUDI MOVES QUICKLY TO CURB CORONAVIRUS OUTBREAK |
Saudi Arabia and governments across the world have moved swiftly on multiple fronts to stem the rise of the coronavirus, also known as COVID-19, in their countries.
The tragic deaths of thousands of people around the world and the lockdown in various countries have brought the world together to fight a common viral enemy.
Saudi Arabia unveiled a SAR 120 billion package to mitigate the fiscal, financial and economic impact brought upon by COVID-19.
“The health and safety of the kingdom’s citizens and residents comes first in the priorities of government’s actions and that the government will avail all the required appropriations for the health sector, to provide and deliver the necessary health services for prevention, treatment and control of infection,” said Mohammed bin Abdullah Al-Jadaan, minister of finance, and acting minister of economy and planning.
The government unveiled a suite of measures, such as a SAR 70 billion fiscal stimulus package focused on exemptions and postponement of some government dues to ensure entrepreneurs can manage their businesses at a time of limited economic activity.
The Saudi Arabian Monetary Agency (SAMA) also announced a package of SAR 50 billion to support the banking sector, financial institutions, and small and medium businesses.
In addition, SAMA decided to cut the repo rate by 50 basis points (bps) from 2.25% to 1.75% and the reverse repo rate by 50 bps from 1.75% to 1.25%, to help ease liquidity in the system.
Other measures include exemption from expat levy for those with expired Iqamas until the end of June. The government will also allow business owners to postpone the payment of value-added tax, excise tax, income tax, the submission of Zakat declarations, and the payment of obligations for the next three months.
“Postponing the collection of customs duties on imports for a period of 30 days against the submission of a bank guarantee, for the next three months and setting the necessary criteria for extending the postponement period for the most affected activities as needed,” the government said.
Another key measure was to postpone the payment of government service fees and municipal fees due on the private sector for a period of three months, and setting the necessary criteria to extend the postponement period for the most affected activities as needed.
G20 VIRTUAL SUMMIT
Saudi Arabia is also making a difference globally. Under the kingdom’s G20 presidency, G20 countries are convening an extraordinary virtual G20 Leaders’ Summit to advance a co-ordinated response to the COVID-19 pandemic and its human and economic implications.
“The G20 will act, alongside international organisations, in any way deemed necessary to alleviate the impact of the pandemic. G20 Leaders will put forward a co-ordinated set of policies to protect people and safeguard the global economy,” according to the G20.
G20 finance ministers and central bank governors have also pledged to act in a co-ordinated manner to address the economic fallout of the pandemic.
“We are ready to take further actions, including fiscal and monetary measures, as appropriate, to aid in the response to the virus, support the economy during this phase and maintain the resilience of the financial system,” the ministers said in a joint statement.
In March, the US Federal Reserve moved to cut interest rates to a target of between zero and 0.25% range, as well as deploying a variety of other policy tools to combat the escalating disruptions to the economy and markets from the coronavirus.
To support the smooth functioning of the US Treasury and agency mortgage backed securities (MBS) markets over the coming months, the Fed said it will purchase at least USD 500 billion of Treasury securities and USD 200 billion of agency MBS. While the timeline for these purchases was not specified, the signal was that they would be front-loaded, and initially could be skewed to longer duration than the market.
In Europe, the European Central Bank announced measures to stem the economic impact of COVID-19, including a EUR 750 billion Pandemic Emergency Purchase Program (PEPP).
PEPP will include all asset classes eligible under the existing asset purchase programme. The purchases will expand the range of eligible assets under the Corporate Sector Purchase Program (CSPP) to non-financial commercial paper as well.
LOCAL COMPANIES
Like the rest of the world, the Saudi government is encouraging people to stay at home, comply with travel restrictions, practice social distancing and avoid crowded places. These new guidelines, however, have taken a toll on economic life and adjustment to services, such as retail and banking.
Despite the challenges, key services are being provided by the kingdom’s mission-critical companies. The Saudi British Bank (SABB) is among the major entities determined to maintain a high level of service during these challenging times.
“We have complied with the Saudi Arabian Monetary Authority’s request for all banks to close some branches to reduce the risk of infection. A list of our remaining open branches is available here, please note opening hours will be restricted to 9am-1pm,” SABB said in a statement.
But the bank said it has a dedicated team managing contingency scenarios to pre-empt further precautionary actions and maintain an uninterrupted banking service.
“If you are unable to visit a branch, remember you can use our mobile banking app and online banking to manage your everyday banking needs,” the bank said.
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