Saudi Arabia unveils 3.7bn riyals stimulus package to support industries

The new initiative will benefit 536 industrial facilities in the kingdom

FILE- In this Sept. 22, 2019 file photo taken with a slow shutter speed, vehicles pass in front of the landmark Kingdom Tower, at left, during celebrations marking Saudi 89th National Day, in Riyadh, Saudi Arabia. The United States’ Gulf allies have pushed for hawkish policies by Washington to pressure, isolate and cripple Iran, but this high-stakes strategy is now being put to the test by the surprise U.S. killing of Iran’s most powerful military commander. As the region braces for what comes next, Saudi Arabia and the UAE are calling for de-escalation. (AP Photo/Amr Nabil, File)
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Saudi Arabia unveiled a 3.7 billion riyals (Dh3.62bn) stimulus package to support companies in the industrial sector that are affected by the coronavirus pandemic.

The new initiative, introduced by the Saudi Industrial Development Fund (SIDF), will benefit 536 industrial facilities, according to a statement on the state-run Saudi Press Agency on Wednesday.

The scheme will support small and medium enterprises within the industrial sector by deferring or restructuring their loans and by offering a line of credit to finance up to three months of operating expenses.

In addition, a new financing product is also being offered to manufacturers of medical supplies to help them purchase raw materials, SIDF said, without specifying details.

“These initiatives [will] support the industrial sector and preserve the national industry from being affected by the economic effects of the coronavirus pandemic,” SIDF said. “Supporting the medical sector [will] enable it to play its role in securing medical supplies and products.”

The fund will defer loan instalment payments worth 800m riyals for 381 small firms. The government is also supporting 123 medium-sized enterprises with a financial package of 900m riyals, while 18 large companies will receive 1.3bn riyals through relief measures, SIDF said. In addition, 14 companies from the medical sector will receive 74m riyals of economic support.

Saudi Arabia is undertaking various measures to mitigate the impact of the coronavirus outbreak on its economy.

Earlier this year, the government set aside 50bn riyals to speed up payments to the private sector. It also announced a discount of 30 per cent on electricity bills for businesses in the commercial, industrial and agricultural sectors for a period of two months, with the possibility of extensions if needed.

The measures announced in April were in addition to 70bn riyals of economic support measures, including the payment of a minimum salary to self-employed drivers.

The kingdom’s central bank is also 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

The global economy is expected to contract 5.2 per cent in 2020, the World Bank said last week.

The virus has infected more than 8.1 million people worldwide and killed more than 440,000 people, according to Johns Hopkins University, which is tracking the outbreak worldwide.

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