Saudi Central Bank extends loan deferral programme

The programme, which was unveiled in March this year, affects contracts worth 77.3bn Saudi riyals

The Kingdom Tower stands in the night above the Saudi capital Riyadh November 16, 2007.  REUTERS/Ali Jarekji  (SAUDI ARABIA) - GM1DWPNRBQAA

The Saudi Central Bank extended its loan deferral programme until the end of the first quarter of 2021 to help businesses cope with the coronavirus-induced economic slowdown.

The programme, which was unveiled in March this year, affects 87 contracts worth 77.3 billion Saudi riyals ($20.61bn), the regulator said in a statement.

The regulator said the decision will allow it to continue to empower the financial sector to play its role in supporting micro, small and medium enterprises, contribute to economic growth and maintain employment in the private sector.

The move is in line with its mission to maintain “monetary stability, support the stability of the financial sector, enhance confidence in it, and support economic growth”, it said.

As with other regulators in the region, the central bank has played an instrumental role in supporting the Saudi economy after the outbreak of the pandemic earlier this year.

It injected 50bn riyals into the local banking sector to boost liquidity and the lending capacity of financial institutions.

Saudi Arabia also unveiled 142 stimulus initiatives worth 214bn riyals amid the pandemic, which had infected 357,360 people and killed 5,896 as of Monday, according to Worldometer. There were 346,802 recoveries.

Finance minister Mohammed Al Jaadan said last week that the economy is expected to grow by 3.1 per cent to 3.2 per cent next year as the country’s sovereign wealth fund, the Public Investment Fund, injects $40bn on an annual basis in 2021 and 2022 to spur growth.

In its latest global forecasts last month, the International Monetary Fund projected that the Saudi economy will expand by 3.1 per cent next year, after a contraction of 5.4 per cent this year due to the pandemic that has tipped the world economy into its deepest recession since the 1930s.

The Washington lender expects the global economy to shrink by 4.4 per cent this year and recover only modestly next year.

Formerly known as the Saudi Arabian Monetary Authority, the regulator's name was changed last week under a new law approved by King Salman.