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Jeddah - Yasmine El Tohamy - JEDDAH: Saudi Arabia has launched a SR670 million ($178 million) initiative to help businesses in the Kingdom defer loan installments due this year amid economic uncertainty caused by the COVID-19 pandemic.
The Saudi Ministry of Finance’s corporate sustainability program will ease loan requirements to support projects for 192 companies employing over 20,000 Saudis across different industries. The ministry launched the program to support the private sector and reduce the financial and economic impact of the pandemic.
Mohammed Alomran, a financial analyst and president of Gulf Center for Financial Consultancy, said the initiative will have long-term benefits.
“This initiative comes within a package of stimulus plans to boost private sector growth and maintain the Saudi workforce as these entities encounter the COVID-19 crisis,” he said.
The ministry has launched more than 15 programs to promote economic recovery in the wake of the pandemic. Alomran expects even more to be launched in response to the challenges facing the private sector. The initiative may worry some companies concerned about accumulating debt, Alomran told Arab News. But despite this, he believes it is a win-win situation for business.
“The cash flow in these entities will be in a strong position in 2021 for repayment as scheduled,” he said.
“As far as accessibility to new debt, I do not think this will be considered now as it will depend on the financial position of each entity next year,” he added. The economic damage caused by COVID-19 has had a devastating effect. Businesses forced to close under government lockdown orders are just beginning to get back on their feet.
Alomran said: “Given the nonstop flow of initiatives geared to stimulate the Saudi private sector, I think the ball now is in the court of the private sector to repay the local economy and society with increased spending and hiring of new Saudi youth.”
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