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Saudi finance minister rejects IMF prediction of economic gloom

Saudi Finance Minister Mohammed Al-Jadaan. (AFP)
Saudi Finance Minister Mohammed Al-Jadaan. (AFP)
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10 Sep 2020 04:09:31 GMT9
10 Sep 2020 04:09:31 GMT9
  • The Fund’s gloomy forecast for the Kingdom has been criticized before by senior officials

Frank Kane

DUBAI: 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.

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