Saudi Arabia’s budget deficit could grow to up to 9 percent of its GDP as a result of the ongoing coronavirus pandemic and falling oil prices, according to the kingdom’s Finance Minister, Mohammed al-Jadaan.
Earlier forecasts had projected that the deficit would be approximately 6.4 percent.
In a news broadcast on Saudi state TV, al-Jadaan said that the government has a contingency plan in place and flexibility due to spending cuts, borrowing and tapping reserves.
To combat the impact of the virus, on Friday Saudi Arabia announced a $32 billion emergency stimulus package to help businesses and boost the economy.
Measures to help businesses include exemptions and postponements of some government fees and taxes, as well as a $13.32 billion package to help banks and SMEs impacted by the coronavirus.
Additionally, Saudi Arabia’s King Salman has approved raising the kingdom’s debt ceiling from 30 percent to 50 percent of its GDP.
“We don’t expect [borrowing] to exceed 50 percent until 2022 and this year we don’t exceed borrowing to exceed 100 billion riyals ($26.6bn),” al-Jadaan was quoted as saying by Reuters. “It could be less.”
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