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Saudi following IMF lead in latest COVID privatisation move

Saudi Arabia will look to sell assets in sectors not previously considered for privatisation, the country’s finance minister said on Wednesday, as the country contends with the economic impact of sustained low oil prices.

Saudi Arabia, the world’s largest oil exporter, is facing a sharp recession because of the coronavirus crisis and depleted oil revenues.

The International Monetary Fund has forecast a 6.8% contraction this year, but Finance Minister Mohammed al-Jadaan said at Bloomberg event that he expects the economy to contract less than that.

“A lot of factors work in our favour … local and domestic tourism for example is picking up very nicely this month,” he said.

Saudi Arabia has planned a series of privatisations in recent years, including the initial public offering of state-owned oil giant Aramco, which took place last year.

“We’re looking at sectors that haven’t been targeted before for privatisation,” Jadaan said, mentioning healthcare and education.

Asked how much revenue privatisations would generate, he said the sale of assets would generate more than 50 billion riyals in the next four to five years.

The prospects for economic recovery were brightened by some promising July data, though the pandemic makes for an uncertain outlook, he added.

Saudi Arabia tripled its value-added tax to 15% this month as part of efforts to bolster state coffers. Though Jadaan said there are no imminent plans to introduce an income tax, he added that nothing could be ruled out.

Later on Wednesday state news agency (SPA) quoted an unnamed Saudi official as saying that the issue has not been discussed by the Cabinet or any government committee.

“This topic is not a matter of discussion,” the source added.

International debt investors are likely to be tapped by Saudi Arabia once again this year, Jadaan said, but no decision has been taken on the currency of the planned issuance.

Saudi Arabia, which has raised $12 billion from international bond issues this year, has increased local debt issuance significantly from its original plans, the minister said.

Source: Reuters

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