By Davide Barbuscia and Marwa Rashad
DUBAI/RIYADH, Sept 9 (Reuters) – The outlook for Saudi Arabia’s financial system stays unsure, the dominion’s central financial institution governor mentioned on Wednesday, because the oil exporter navigates the results of low oil costs and the coronavirus pandemic.
Ahmed al-Kholifey, governor of the Saudi Arabian Financial Authority (SAMA), chatting with a digital Euromoney occasion, mentioned he was assured within the nation’s monetary stability and reiterated that the dominion was dedicated to protecting the riyal pegged to the U.S. greenback.
“For us, in our state of affairs, the minimize in oil manufacturing and the influence of the virus, they’ve impacted the expansion projections,” he mentioned. “The outlook for 2020 stays unsure.”
The Worldwide Financial Fund has estimated the Saudi financial system might contract by 6.8% this 12 months. Saudi officers have beforehand mentioned their very own projections have been much less “pessimistic” than that.
The governor mentioned the Saudi fastened alternate fee was one of many “overriding anchors” of stability of the monetary sector in Saudi Arabia, however added warning was wanted within the gentle of the financial stimulus that has been supplied to the financial system.
The Saudi central financial institution in March launched a 50-billion riyals ($13.33 billion) bundle to assist the personal sector. In June, it introduced the injection of 50 billion riyals into the banking sector to assist liquidity.
“One needs to be cautious whenever you unplug that life assist, what would occur, notably for the standard of property,” he mentioned.
“We really feel comfy however, once more, we can not actually calm down so long as we’re within the midst of the disaster.”
There have been indicators of resilient financial exercise within the kingdom in July, together with annual will increase in factors of gross sales transactions and lending to the personal sector, information from the Saudi Arabian Financial Authority confirmed final month.
However enterprise circumstances within the Saudi non-oil personal sector deteriorated in August, with demand harm by a pointy hike in value-added tax, a survey confirmed final week. ($1 = 3.7505 riyals) (Reporting by Davide Barbuscia and Marwa Rashad; Modifying by Jon Boyle and Nick Zieminski)