Payment of contractors’ bills to vitalize economy: Experts

JEDDAH — The National Committee of Contractors (NCC) expects the government to clear all outstanding payments to contractors, which reached more than SR100 billion, within the next few weeks. The payments were delayed due to a sharp decline in oil revenue and new measures taken by the government to cut spending. Deputy Crown Prince Mohammed Bin Salman, chairman of the Council for Economic and Development Affairs, had announced a settlement of dues to the contractors more than two weeks ago. Speaking to Al-Madina newspaper, the committee's chairman, Fahd Al-Hammadi, said the government has so far paid about SR40 billion in arrears to the contractors and they expect at least 80 percent of the remaining bills would be released very soon. He asked the Finance Ministry to expedite the payments, which were ordered by the Custodian of the Two Holy Mosques King Salman. A number of economic experts and analysts believe that the payment of the arrears owed to the contractors by the government would revitalize the Saudi economy and pump fresh blood to the contracting sector. They said the payment would also increase the solvency of banks, end delays in payments of salaries to workers and revive faltering infrastructure projects. Fadl Abu Al-Ainain, an economic expert, said the payment of arrears would take out the private sector from its present lull, which caused a number of small and medium companies to leave the contracting sector. "This will help the contractors pay their debts to the banks and hence boost the banks' solvency. It will also enable them to pay the delayed salaries of their workers," he said. Farouk Al-Khateeb, professor of economics at King Abdul Aziz University in Jeddah, said the payment of the dues would help revitalize a number of sectors, which are directly or indirectly linked to contractors. "A number of sectors such as construction, retail business, banks and transport will feel the momentum," he said. Khareeb also said the payment of the arrears would restore the confidence of foreign investors in the Saudi stock market.