94% of Saudi firms have healthy finances with no loans: MISA Survey

By Rahul Vaimal, Associate Editor
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The recent Ministry of Investment of Saudi Arabia (MISA) survey conducted through its MISA COVID-19 Response Centre (MCRC) has revealed that the majority (94 percent) of the businesses surveyed are in a comparatively healthy financial position with no previous loans. While most companies that have loans are in a position to make repayments.

As Saudi Arabia reduces restrictions forced to check COVID-19 in three phases, the Saudi investor community posted their main anxieties during the pandemic.

Despite difficulties, most of the investors assert that they are capable to maintain their businesses with their current cash flows. However, 14 percent of firms are not able to maintain operations factoring a major area of interference for the Saudi government, according to the survey.

The majority of investors studied by MISA encounter difficulties in paying their workers’ salaries (49 percent), while many are fighting to cover other costs (48 percent) and create income (46 percent).

Businesses that find it difficult to repay their loans had a positive experience when they reached out to the government and commercial banks regarding the granting, deferral or restructuring of their credits. This is a clear representation of the positive attitude produced by the government’s stimulus package and encouraging handling of the situation.

“The pandemic has impacted the country directly due to disruption of activity and indirectly through lower oil prices. Nonetheless, Saudi Arabia is better positioned to cope with the pandemic compared to many G20 countries from a financial perspective.”
Giyas Gokkent, Economist
– JP Morgan,  MENA and Pakistan

JP Morgan anticipates the economy to shrink nearly 3 percent.

Despite the many challenges, MISA gave permissions for 348 new foreign investment projects in Q1 2020, making it the most active period for investor interest in the last decade.

Early this May, Moody’s Investors Service had reduced Saudi Arabia’s outlook to ‘negative’ from ‘stable’, saying the oil price crash has increased fiscal risks for the kingdom.

Although, Saudi is experiencing historically low oil prices, its finance minister, Mohammed al Jadaan is convinced that the kingdom’s economy is stable and has the capacity to deal with the coronavirus crisis despite the need to decrease spending. “The Saudi economy is able to absorb the decline in revenues and to deal with the budget deficit,” Mr. al Jadaan added in a statement he gave to the regional press agency.