The Saudi central bank has provided 50 billion riyals ($13.3bn, €11.9bn, £10.7bn) to support liquidity in the banking sector following the economic fallout from the coronavirus pandemic.
The stimulus measure was introduced to help banks support and finance the private sector, the Saudi Arabian Monetary Authority (SAMA) said, as the economy continues to suffer from the double blows of tumbling oil prices and business interruption from Covid-19.
SAMA data showed a sharp drop in consumer spending, with point-of-sale transactions down 33 per cent and cash withdrawals down by 35 per cent compared with 2019.
SAMA said on Monday, June 1, that banks were “still registering good performance indicators, enhancing [their] ability to face challenges and crises.”
The stimulus measure is part of a series of actions taken by the Saudi government to buffer against this turbulent economic crisis.
Other measures include lending to the private sector more generally from the government, which increased in April by 12.2 per cent year on year.
Additionally, Bloomberg reports that, Finance Minister Mohammed Al-Jadaan said the government had transferred around $40bn from the central bank’s foreign currency reserves to the sovereign wealth fund in March and April to enable it to take advantage of recent market turmoil by investing in overseas company shares. Bloomberg reports that the country has invested in companies such as cruise operator Carnival, BP, Boeing , Citigroup and Facebook.
At the same time, Saudi Arabia is also expected to raise its official selling price (OSP) for all grades of oil it sells to Asia in July, to track a jump in Middle East benchmarks. Saudi Arabia is expected to increase the July OSP for Arab Light crude by $3.80 a barrel on average, a survey of five refinery sources showed.
Forecasts ranged from an increase of $2-$3 a barrel to as much as $5 a barrel, as refiners’ margins weakened in May while a stronger DME Oman crude price, one of two underlying benchmarks for Saudi crude in Asia, has increased refiners’ feedstock costs, they said.