Saudi Arabia extends stimulus initiatives to help businesses cope with Covid-19 impact

The measures focus on supporting Saudi employees, deferring payment of some government fees and suspending penalties

Saudi Arabia extended several government initiatives, set to expire in July, to help the private sector cope with the economic fallout of the coronavirus pandemic.

The initiatives focus on supporting Saudi employees, deferring payment of some government fees and suspending penalties, a statement carried by the Saudi Press Agency said on Thursday, citing a decision by King Salman. The measures include a pledge to cover 60 per cent of some Saudi salaries in the private sector through a government unemployment insurance programme called Saned.

“This step comes as an extension of urgent government measures that contribute to supporting individuals, investors and private sector enterprises, and to enhance their roles as partners in developing the kingdom of Saudi Arabia’s economy,” the statement said.

The Covid-19 pandemic is the greatest challenge facing the world economy since the Great Depression, which has slid into a recession expected to be the worst to date, according to the International Monetary Fund. The economies of the Middle East and Central Asian countries are projected to shrink an average 4.7 per cent, according to the IMF.

In addition to supporting Saudi employees through Saned, the government is suspending penalties related to recruitment, lifting the suspension of private sector facilities to correct their activity status and deferring the collection of customs duties on imports for 30 days in exchange for providing a bank guarantee.

Postponing the payment of value-added tax as well as accelerating payment of VAT refund requests are also included in the measures announced by the government.

The government is also “enabling business owners, for a period of two months, to postpone the payment of value-added tax, excise tax, income tax, and the submission of Zakat declarations during coronavirus pandemic.”

Since the outbreak of coronavirus, Saudi Arabia rolled out 142 stimulus initiatives with a total value of 214 billion Saudi riyals ($57bn/Dh210bn) to support individuals, private sector businesses and investors, the statement said.

Saudi Arabia, the biggest oil exporter in the world, has started to gradually reopen its economy after easing strict movement restrictions that led to the closure of all but essential businesses in the country.

The kingdom’s central bank last month said it is injecting 50bn riyals into its banking sector to boost liquidity and enhance the lending capacity of financial institutions as part of continued efforts to support the sector amid the pandemic.

Saudi Arabia extended 3.7bn riyals in stimulus to support companies in the industrial sector that are affected by the coronavirus pandemic.