Saudis see high hopes for 2020 upended by coronavirus pandemic

This was supposed to be Saudi Arabia’s year to shine as host of prestigious G20 garing of world leers. event would have seen Crown Prince Mohammed bin Salman share handshakes and wide smiles with presidents and prime ministers.

Inste, garing this vember will likely be a virtual meet-up, stripping its host of pomp that would have accompanied televised arrivals on Riyh's tarmac.

It was also to be ar year of sweeping change for Saudi Arabia. kingdom h only just begun to swing open its doors to tourists and eye-popping concerts when pandemic struck, spawning social distancing and lockdowns.

“It’s unfortunate, but I think that some of sectors that Saudi Arabia was most interested in going into are going to be hit hard,” said Bessma Momani, a professor of Middle East studies at University of Waterloo in Cana. “If you look at investment that was being anunced and part of construction effort, a lot of it included ater venues, concert halls... That’s really under risk.”

With Saudi cities under curfew and country’s borders shut, even upcoming hajj pilgrim in Mecca could be cancelled or dramatically pared down. hajj, which starts in late July this year, has t been cancelled in 90 years since Saudi Arabia's founding.

hajj t only provides Saudi Arabia with immense influence and prestige among Muslims, it also generates around $6 billion in revenue for government annually.

Since early April, Mecca has been under a strict 24-hour curfew. Grand Mosque re housing cube-shaped Kaaba, Islam's holiest site, is closed to public, and smaller, year-round umrah pilgrims have been suspended.

impact of coronavirus and low oil prices have forced a recalibration of Prince Mohammed's ambitious plans to revamp oil-dependent ecomy, which is expected to contract 3% this year.

Cuts of at least $8 billion are being me to crown prince's mega-projects, like a futuristic city in desert called Neom and luxury tourism resorts along Red Sea.

Prince Mohammed hopes to transition country away from oil, but in short-term his plans rely on oil revenues, which have plummeted to below $40 a barrel. After producing a market-jolting level of 12 million barrels a day in April, Saudi Arabia is w producing just 9.3 million barrels a day as it les major oil producers in an agreement to cut production.

Revenue from oil is expected to generate just $133 billion in 2020 for Saudi Arabia, down 34% from last year and down 58% from highs in 2013, according to research by Jwa Investment.

seismic blows have also curtailed state’s largess of subsidies and welfare for citizens. A monthly bonus for civil servants has been stopped and taxes on basic goods are tripling in July. A committee is being formed to review salaries in public sector, where most Saudis are employed. That w bill alone will cost government $134 billion this year, half of all projected spending.

Despite challenges, Saudi Arabia has relatively low debt and hefty financial reserves built-up during years of high oil prices. This has allowed government to comfortably provide free health care and hotel quarantines for anyone with coronavirus, including those residing in kingdom illegally.

Saudi Arabia has one of highest rates of coronavirus infection in region, with number of new daily cases reaching ir highest level ever on Monday. kingdom has confirmed more than 132,000 cases of virus, including 1,011 deaths.

As pandemic hit businesses across country, King Salman allocated $2.4 billion to cover 60% of salaries for many Saudis in private sector, where a $32 billion stimulus pack was anunced. Jwa Investment estimates that up to 75% of all Saudis who work in private sector will have ir salaries partially covered by government during pandemic.

To cover budget deficit, Saudi Arabia has plowed into its net foreign assets, which have dwindled from nearly $740 billion in 2014 to less than $450 billion in April.

Some $40 billion in reserves were moved in March and April to Saudi sovereign wealth fund to invest abro as stock prices plunged. Public Investment Fund, which Prince Mohammed oversees, purchased $7.7 billion worth of stakes in companies, including Boeing, Disney, Marriott, Facebook and Starbucks, as well as U.S. banks Citigroup and Bank of America. fund also bought shares in oil companies BP, Royal Dutch Shell and Total amid market volatility.

In or risky bets, fund in April purchased an 8.2% stake in cruise line company Carnival and a 5.7% stake in Live Nation, entertainment company behind concerts for world's biggest stars. deals are worth some $872 million and were welcomed by both companies.

It's a turnaround from late 2018, when Western businesses turned away from crown prince and fund following outcry over killing of Saudi writer Jamal Khashoggi in Saudi consulate in Turkey.

“I think as time has gone on, more companies are taking ir cue from ir own governments, which have continued to eng Saudi Arabia and have also looked to or steps kingdom has tried to take to reform,” said Prem Kumar, who les Albright Stonebridge Group's Middle East strategy and commercial diplomacy division.

Domestically, Jwa Investment estimates that 1.2 million foreign workers, many of whom work in hospitality, tourism, retail and construction, will leave Saudi Arabia by end of year.

Momani, professor, said expat exodus could provide a silver lining for women and young Saudis to fill some of those jobs.

“ one slow factor has always been women’s participation in labor force. So re’s room to expand that,” she said. “This might be an opportunity with furr Saudization of labor force.”