Saudi Arabia Announces $35.2 Billion Stimulus Package to Mitigate Impact of Coronavirus
Saudi Arabia’s Minister of Finance and Acting Minister of Economy and Planning, H.E. Mohammed Al-Jadaan, has announced a $32 billion (SR120 billion) emergency fund to address the economic effects of Covid-19. The package includes an $18.66 billion (SR70 billion) set of initiatives which exempt and postpone government dues, and a $13.33 billion (SR50 billion) package by the Saudi Arabian Monetary Authority (SAMA) to support the banking sector, other financial institutes, and SMEs. A further $3.2 billion (SR12 billion) package was announced by the Saudi Social Development Bank to support owners of small and emerging enterprises in priority sectors, in addition to low-income families.
The $18.66 billion set of initiatives include:
- Extension of Iqamas (residency permits) for expats whose permits have expired until June 20, 2020. These residents will be exempt from paying an expat levy.
- Employers may refund the fees of work visas which were issued during the travel ban on entry and exist or extend them for a period of three months without charge.
- Employers may extend exit and re-entry visas which were not used during the travel ban for three months without charge.
- Business owners may postpone the payment of value-added tax, income tax, excise tax, and the submission of zakat declarations and payment obligations due therefrom, for a period of three months. The initiative further allows zakat certificates to be granted without restrictions for the 2019 fiscal year while also accepting installment requests to the General Authority of Zakat and Income Tax without applying the condition of advance payment.
- Postponing the collection of customs duties on imports for a period of thirty days against the submission of a bank guarantee, for the next three months and setting the necessary criteria for extending the postponement period for the most affected activities as needed.
- Postponing the payment of some government services fees and municipal fees due on private sector, for a period of three months.
- Lending approval and other forms of financing to be authorized by the Minister of Finance, in addition to an exemption from payment of fees and returns on loans granted until the end of 2020.
The $13.33 billion package will focus heavily on providing financial support for SMEs impacted by the epidemic. Up to $8 billion (SR30 billion) will be earmarked for banks and financial institutions for deferred loan payments by SMEs for six months. SMEs will also be granted concessional of up to $3.5 billion (SR13.2 billion) from banks and financial institutions to maintain operations, contribute to economic growth and maintain employment rates. Banks and financial institutions will further use a fund up to $1.6 billion (SR6 billion) to exempt SMEs from the costs loan guarantee programs. An additional $213.33 million (SR800 million) will be used to cover payment fees for all private sector stores and facilities registered in the national system for a period of three months.
The $3.2 billion fund allocated by the Saudi Social Development Bank, with support of the National Development Fund, includes five tracks designed to mitigate the expected financial impact of Covid-19:
- The first track consists of $1.06 billion (SR4 billion) to support low income families in 2020.
- The second track consists of $533 million (SR2 billion) to support 6,000 entrepreneurs launch their development projects within micro and small enterprises
- The third track consists of $533 million (SR2 billion) to support 1,000 small and medium health facilities.
- The fourth track consists of $533 million (SR2 billion) to contribute to the financing of 50,000 small local facilities.
- The fifth track extends the deadline for all entrepreneur projects which were financed in 2019 and 2020 by six months, and will allocate $533 million (SR2 billion) for all deferred payments