Saudi Arabia will cut down its this year's budget by around five percent, the Finance Minister said a day after the oil prices in the international market came crashing down. The kingdom is reportedly facing the heat due to the current lockdown because of coronavirus. Saudi Arabia shut down malls, cinemas, restaurants, and other public places in order to prevent the spread of the virus.
The Minister of Finance and Acting Minister of Economy and Planning, Mohammad Al-Jadaan, in a statement released by The Saudi Press Agency, stated that the government worked on preliminary measures to ensure the provision of the financial requirements necessary to implement the preventive and direct measures to deal with the consequences of the epidemic and limit its spread to protect government installations and agencies and the continuity of their work.
The Minister further added that the cuts would have "the least social and economic impact". Al-Jadaan said that the government maintained huge reserves and the economical position of the kingdom is such that it enables it to deal with emerging challenges and helps it maintain financial stability.
As per reports, the oil prices touched an all-time low when Russia and Saudi Arabia failed to agree on a plan to curb supply at the recently concluded OPEC meet, following which both the countries boosted the output to a record level. Media reports suggest that the flood of supply coming from Saudi Arabia and Russia could lead to the largest surplus of crude in history. An OPEC meeting planned for March 18 in Vienna has been called off after Saudi Arabia and Russia failed to reach an agreement.
US President Donald Trump on March 13 had said that Washington would take advantage of low oil prices to fill emergency crude oil reserves. India also took advantage of the low oil prices in the international market as the government raised excise duty on fuel by Rs 3 per litre. Central banks all over the world took action to prevent the economic fall out with US Federal Reserves on March 15 slashing its key rates to near zero. However, the measures did little to strengthen stock markets in freefall, as investors anticipate a sharp contraction in demand in the coming weeks anyway.