Saudi Arabia supported its sovereign wealth fund PIF with 150 billion riyals ($40 billion) from the central bank’s foreign reserves in March and April to enhance the fund’s investment capacity amid the coronavirus pandemic, Minister of Finance Mohammed al-Jadaan said on Friday.
“Maximizing the return on the Kingdom’s assets will reflect positively on economic performance and public finances, and reduce the negative effects of the coronavirus pandemic,” al-Jadaan said in a statement carried by state news agency SPA.
He added: “While foreign reserve flows are on average within historical norms, a noticeable decline in FX reserves is due to the transfer, as PIF investments do not appear on the Saudi Arabian Monetary Authority (SAMA) published data.”
The Kingdom’s central bank foreign exchange reserves fell in March at their fastest rate in at least 20 years and to their lowest since 2011.
Al-Jadaan mentioned that PIF continues to implement its investment plans, which included “seizing a set of investment opportunities that had arisen under the current circumstances in the global financial market.”
Bloomberg had reported in mid-May that PIF bought billions of dollars of stock in companies including BP Plc, Boeing Co., Citigroup Inc., Facebook Inc, Walt Disney Co., and Bank of America Corp.
He added: “The government continues to implement its development plans to support growth and economic diversification and enhance the role of the private sector and support local production, whether through the state’s general budget or through development funds and the Public Investment Fund (PIF).”
Saudi Arabia’s efforts against COVID-19
Al-Jadaan also highlighted how the government dealt with the pandemic by imposing strict health precautions early on and launching economic stimulus packages to support the private sector, investors and the people.
Earlier in May, the Kingdom took measures to mitigate the economic impact of the coronavirus, including reducing expenditure by 100 billion riyals ($26.6 billion), tripling VAT and suspending cost of living allowance.
This came after Saudi Arabia’s revenues dropped due to historically low oil prices and reduced economic activity amid coronavirus lockdowns and curfews.
Its oil revenues fell 24 percent in the first quarter of this year to 128.771 billion riyals, while non-oil revenues fell 17 percent to 63.3 billion riyals. And the Kingdom slipped into a $9 billion budget deficit in the first quarter.
The Minister added that Kingdom’s steps towards gradual re-opening, which came into effect on Thursday, represent a new phase of dealing with the COVID-19 pandemic, during which the government focuses on balancing between re-opening economic activities and maintaining the stability of health conditions.
He called on individuals and establishments to continue following precautionary health measures to avoid the government re-imposing the suspension of economic activities if health conditions deteriorate.
The government shortened curfew and allowed the resumption of some economic activities, and from May 31 it will allow the resumption of Friday and group prayers in mosques, the return of public and private employees to work from their offices, the resumption of dine-in services in restaurants and cafes, the operation of domestic flights.
Eventually, starting from June 21, Saudi Arabia will return to “normalcy”, except for Mecca, and restore conditions to how life was before implementing coronavirus curfews.
Al Arabiya English