Arab News, Thursday, Sep 10, 2020 | Muharram 22, 1442
Saudi finance minister rejects IMF prediction of economic gloom
Saudi Arabia: International Monetary Fund experts are wrong and the
Saudi economy will do better this year than the IMF’s pessimistic forecast of a
6.8 per cent contraction, the Kingdom’s Finance Minister Mohammed Al-Jadaan said
on Wednesday.
The challenge to the IMF came during a virtual discussion organized by the World
Economic Forum involving Al-Jadaan and Kristilina Georgieva, the IMF’s managing
director.
“We are likely to end 2020 with negative growth, but it is likely to be on the
lower side of OECD expectations on G20 members. I hope, and I’m challenging
Kristilina, that we will come quite below what they are expecting in terms of
2020 negative growth,” the minister said.
He added that 2021 would see “very healthy growth”. The IMF has forecast 3.1 per
cent growth next year.
The Fund’s gloomy forecast for the Kingdom has been criticized before by senior
officials. The IMF significantly downgraded Saudi growth prospects in its last
World Outlook Forecast in June, from a 2.3 per cent decline to 6.8 per cent as
the fall in oil revenue and the COVID pandemic hit the economy.
Jadaan painted a cautiously optimistic picture of the Kingdom’s prospects,
though he warned “we are not out of the woods yet,” pointing to the risk of a
second wave of infection like that hitting Europe.
“The outlook is quite positive. The response from the government on debt has
been wise. We also faced an oil market shock and revenue reduction but because
of the strength of our ‘fiscal envelope’ we were able to manage that and manage
it very well,” he said.
He praised the actions of the G20, of which Saudi Arabia is president this year,
for promising debt relief for the 73 of the most vulnerable economies.
“Globally, we need to feel the pain of the less fortunate countries in the
crisis,” he said.
Separately, Ahmed Al-Kholifey, the governor of the Saudi Arabian Monetary
Authority, the Kingdom’s central bank, told a Euromoney virtual gathering that
the outlook for the year was “uncertain,” but he remained confident of the
Kingdom’s financial stability and its link to the US dollar, which was the
“over-riding anchor” in financial policy.