DUBAI/RIYADH (Reuters) – Saudi Arabia’s finance ministry signed supply chain finance agreements with three commercial banks, Saudi state news agency SPA said on Monday, in a move aimed at easing government payments to private sector suppliers such as contractors.
“It enables suppliers to the government to get their funds very very quickly at a very very competitive interest rates,” David Dew, SABB’s managing director, told Reuters.
“It’s a way of accelerating working capital, getting the suppliers to get their payments earlier.”
After oil prices crashed in 2014-205, the government of the world’s largest oil exporter reduced or suspended payments that it owed to construction firms, medical establishments and even some of the foreign consultants who helped to design its economic reforms.
The finance ministry then pledged in late 2016 to accelerate the payment process within 60 days from receiving the invoice.
Monday’s agreement will support government efforts to speed up the pace of payments and dues to private sector suppliers, Samba Financial Group said in a separate statement.