Saudi to pay back companies after oil-led delays
A council headed by Saudi Arabia's Deputy Crown Prince Mohammed bin Salman bin Abdulaziz confirmed outstanding payments will be made by December 2016
A committee headed by Saudi Arabia's Deputy Crown Prince Mohammed bin Salman bin Abdulaziz has confirmed it will complete all private company payments delayed due to declining oil revenues "by December 2016".
The Deputy Crown Prince also acts as the chairman of the Economic and Development Affairs Council, which made the announcement following a meeting held on 7 November.
Economic and development issues were discussed during the meeting, and it was decided to complete payments owed to the private sector that were delayed "in light of the sharp decline in oil revenues".
The committee also discussed completing state projects and implementing significance- and efficiency-reviews of projects to reprioritise spending.
A "package of solutions and procedures for the settlement of dues" was authorised by the Deputy Crown Prince, with payments expected to begin "immediately".
Settlement completion is targeted by the end of the current fiscal year (FY) in December.
Saudi Press Agency confirmed that an electronic platform to automate payment procedures and improve transparency were also discussed by the council.
Actions implemented "to raise the efficiency of government spending – including orders and decisions of restructuring some sectors of [the] government" were reviewed during the meeting.
Decisions – made between the end of FY 2015 and commencement of FY 2016 – to review project contracts and reschedule their delivery, contractual formula or technical specifications to boost savings were also discussed by the council.
This April the Deputy Crown Prince said that delays in government payments to contractors in Saudi Arabia were spurred by a major restructuring process being implemented by the Kingdom as part of the government's initiative to streamline its operations.
At the time, Prince Mohammed said "there is no doubt" the issue of delayed payments – likely to discourage investors eyeing Saudi Arabia – "will be dealt with".
He continued: "What causes this commotion is that we were trying to avoid a bigger danger.
"We tried to compile all decrees over the last few years and we found that ministries could commit to more than $1 trillion based on these decrees.
"There were also decisions approved six years ago and to this day, no contractual agreements were made by these entities.
"However, these entities still had the power to sign on more than $1 trillion. If passed, this would have been a catastrophe," he continued, according to Bloomberg.