Saudi Arabia has ample liquidity in its financial markets and is taking various measures to mitigate the impact of the coronavirus crisis and lower oil prices on its economy, the kingdom's finance minister said.
"It is very important to take very tough and strong measures, which might be painful but are necessary for public financial stability," Mohammed Al Jadaan, Saudi Arabia's finance minister, said in an interview with Al Arabiya TV on Saturday. "As long as we do not touch [the] basic necessities of the people, all options are open."
The list of budget items that will be affected is "extremely long" and some projects aimed at achieving Vision 2030 – the kingdom's economic diversification programme – will face spending cuts amid precautionary measures to contain the virus, Mr Al Jadaan said.
The global economy is facing its worst crisis since the Great Depression of the 1930s and growth is forecast to fall 3 per cent this year, according to the International Monetary Fund.
More than $8 trillion (Dh29.3tn) in stimulus packages has been announced by governments across the world with more rescue programmes in the pipeline.
Saudi Arabia, which has more than 27,000 coronavirus cases, has allowed businesses to reopen and eased restrictions on movement to lessen the economic toll of the coronavirus containment measures.
The world's biggest crude exporter is facing a widening budget deficit caused by lower oil prices, major production cuts agreed by Opec and its allies, and the economic impact of the coronavirus crisis.
However, the kingdom's vast reserves provide a buffer to cushion the impact, the minister said.
"If we can see from the past five years, if we didn't have these reserves, we would have faced major crises; we used these reserves to curb the budget deficit," Mr Al Jadaan said.
The kingdom used more than 1tn riyals (Dh975 billion) during the past four to five years to cover the deficit, he said.
Mr Al Jadaan's comments follow his earlier statements on April 23 when he said the "kingdom has gone through and seen other, deeper crises in the past and survived them".
On Saturday, Mr Al Jadaan said the country must be "careful and firm" in managing public finances to continue providing necessities in case the crisis continues.
Mr Al Jadaan emphasised that liquidity in the country's banking system was "very high" and that local lenders were capable of meeting the financing needs of the private sector.
Coronavirus around the Middle East
The government will continue to tap debt markets locally and internationally, depending on market conditions and the cost of public debt, he said.
"It is very important that we are alert and conscious that the cost of debt does not increase because an increase in the cost of debt is not only harmful for public financing and the cost of servicing loans in the future, but is also bad for the economy," Mr Al Jadaan said.
"An increase in the cost of debt for the government increases the cost of debt for companies, and even for citizens through their mortgages and consumer loans.”
He said the kingdom must ensure its public finances are preserved, enabling it to continue supporting the economy for years to come.
"I do not think that the world or the kingdom will go back to pre-coronavirus conditions because there have been many economic changes, both in normal economic activities and supply chains," he said.
He said the effects of the pandemic would be felt in the second, third and fourth quarters, depending on the health and economic conditions.
“The kingdom is committed to the task of sustaining public financing, and is committed to having enough financial strength to face this crisis even if it is prolonged.”