Saudi Central Bank presents COVID-19 strategy to IMF

BERN: The International Monetary Fund (IMF) has released its updated growth forecast for the next five years in time for the spring meetings of the World Bank and IMF, which take place this week. Things look better than expected than six months ago, or even in January, when the IMF provided its last update.

The global economy is expected to grow 6%, up from 5.5% projected in January, with China and the United States taking the lion’s share. The Middle East and Central Asia show growth rates of 3.7 and 3.8 for 2021 and 2022.

These numbers are important because they tell us that after the biggest slowdown in economic activity since the Great Depression, there is light at the end of the tunnel. However, this mainly applies to countries, which have the means to vaccinate their populations against the coronavirus disease (COVID-19).

When it comes to the GCC, Saudi Arabia and the United Arab Emirates are the shining lights – both having implemented successful vaccination programs for their populations. The Kingdom is expected to grow 2.9% in 2021 and 4% in 2022.

In an interview with Jahad Azour, director of the Central Asia and Middle East department of the IMF, Fahad Almubarak, governor of the Saudi Central Bank, explained how Saudi Arabia had reached the positive outlook by implementing the necessary measures during the pandemic.

The governor pointed out that several Saudi government programs have cushioned the blow to the economy from the pandemic by supporting small and medium-sized enterprises (SMEs) with $ 74 billion in deferred loan payments and extension guarantees. loans, as well as cash injections worth $ 13 billion to these companies.

“Where are the maximum risks in our economic sector? We have found that SMEs are the most affected. Therefore, we have launched several programs, ”Almubarak said in an interview with the IMF. “One of them is that we have asked banks to defer payments owed by SMEs. (One) additional program secures funding. The central bank, along with other government entities, we would help the SMEs by guaranteeing their loans so that they can support the temporary situation. “

Sound macroprudential management and appropriate support from the SME sectors will enable the Kingdom to emerge relatively unscathed from the annus horribilis 2020 induced by the pandemic.

In this context, we must pay tribute to OPEC +, which effectively managed the oil supply and demand picture. A stable and predictable outlook for oil prices, achieved through forward-looking and prudent OPEC + supply management, remains the silver bullet for how the global investor community views GCC economies. . Overall, the macroeconomic outlook for the global economy as forecast by the IMF looks better than just three months ago.

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