Saudi Arabia may offer “almost interest-free” loans to companies in labour-intensive industries, as part of a plan to stimulate an economy squeezed by low oil prices and spending cuts, Finance Minister Mohammed Al-Jadaan said.
Officials are in talks with private companies about other kinds of government support too, Al-Jadaan said in an interview on Thursday in Washington, where he’s attending International Monetary Fund and World Bank meetings. The proposal will likely be ready by the end of the second quarter, he said.
Saudi Arabia has embarked on what it describes as an unprecedented shakeup of an economy that’s heavily reliant on oil. The so-called Vision 2030, spearheaded by Deputy Crown Prince Mohammed bin Salman, was announced last year and includes plans to sell shares in state companies and curb government spending.
There’s also a strong emphasis on creating jobs for the kingdom’s youthful population. Earlier on Thursday, Saudi authorities said that foreigners will be barred from working in shopping malls, a move expected to put 35,000 Saudis into work.
Al-Jadaan said the new lending program will help companies restructure debt, easing the impact of higher domestic energy prices as subsidies are cut.
Authorities are also asking companies “what do you need from the government side, what are the issues you’re suffering in terms of licensing, procedure?” he said.
Saudi Arabia is likely to return to domestic and international bond markets this year after a successful sukuk sale, Al-Jadaan said, without giving details. He said the government prefers to borrow rather than draw on its reserves.
The government didn’t tap the central bank’s foreign-exchange holdings in the first quarter of this year, and the decline in reserves in the first two months may have been a result of private companies settling overseas bills or financing imports, al-Jadaan said.