Saudi banks sign supply chain finance deal with government
Saudi Arabia’s finance ministry and three of the kingdom’s largest banks have launched a supply chain finance mechanism that will allow entrepreneurs to secure money owed to them faster.
The finance ministry has partnered with Saudi British Bank, Samba Financial Group and National Commercial Bank, according to a statement. The loans will be available to government providers whose invoices have been approved but are still awaiting payment.
The move is the latest sign that the government is trying to better support suppliers, many of whom have complained about difficulties getting bills approved by the government following the fall in oil prices in 2015.
The government pledged SAR 50 billion ($ 13 billion) to speed up payments to government contractors in April as part of stimulus measures to support the private sector, which has been hit by the fallout from the coronavirus pandemic.
“We all benefit – banks get business, vendors get money sooner – and government benefits from the effects of putting money back into circulation,” said David Dew, CEO of SABB, in an interview.
SABB has set up a revolving credit facility of SAR2 billion as part of the deal with the government, he said. The government could consider adding all Saudi banks to the supplier finance program, he said.