DUBAI: Saudi Minister of Finance Mohammed Al-Jadaan said companies and governments need “a significant structural reform to improve resilience,” which has become an increasing necessity to avoid risks during uncertain times.
“I think governments will need to ensure that they do what they can every day, every week, every month and every year, to be more resilient by (applying) structural reform and continuing to enhance that, and increase(ing) your ability to respond to shocks,” Al-Jadaan said.
The minister made the remarks while participating at a session at the World Economic Forum (WEF) in Davos titled “Resilience: What It Means and What to Do About It.”
The notion of resilience has become an increasing necessity to navigate global challenges. Countries and governments are seeking to find new ways for growth and financial strategies in uncertain times.
Experts at the panel discussed how leaders can learn from success stories to move beyond short-term responses and drive a global resilience agenda.
Al-Jadaan said that governments should not spend all their money but rather encourage investment, including investment in human resources.
In countries in the Gulf region, which tend to experience market volatility, Al-Jadaan said that Saudi Arabia and GCC states need to apply buffers in order to reduce risks.
“In Saudi Arabia, we take government reserves as part of the demand side, not the supply side. We do not use it as part of the means to supply our needs, because you need to deal with external shocks.”
“In 2021, we knew that with quantitative easing and (domestic) money supply that inflation was going to happen. So, we took proactive approaches such as putting a ceiling on energy prices which actually controlled inflation significantly in the Kingdom.
“We also established a very good network for social safety net to support low-income individuals in a manner that dealt with the inflation. We ended up with an inflation that did not exceed 4 percent.”
Last month, the figure was below 2 percent, he added.
“So you can, if you are proactive, deal with shocks and become more resilient.”
While being one of the world’s largest donors, Saudi Arabia would like to do all it can to help low-income countries, Al-Jadaan said. Yet, just like other donors, it increasingly needed to see reforms taking place and that “you’re doing your part.”
The WEF said that rising frequency of shocks and disruptions in recent years has led to a global output loss of more than $3.6 trillion.
Structural reform has become an increasing necessity for companies and governments seeking to find new routes for growth and financial strategies in uncertain times, it added in a statement.
