DUBAI Feb 5 Payment delays in Saudi Arabia
should ease gradually in 2017 after recent payouts by the
government to companies, particularly builders, the regional CEO
at credit insurer Coface said on Sunday.
Companies in the kingdom and other Gulf states have
sometimes had to wait months to be paid for projects as low oil
prices have prompted governments to conserve cashflow.
In Saudi Arabia the situation eased in the final months of
2016 as the government disbursed about 100 billion riyals
($26.66 billion) in November and December, according to
statements by officials and central bank data.
"The situation in Saudi Arabia will improve slightly," said
Massimo Falcioni, Coface's chief executive of Middle Eastern
countries, said at a news conference discussing feedback from
23,000 companies in the kingdom and the United Arab Emirates.
"All our customers started to receive payments in November,
December and this continued in January, mostly in construction,
metals and general trading, which were directly related to big
The number of delayed payments in the kingdom fell by 8
percent between the first and second quarters of 2016, the
latest quarters available, data from Coface showed.
The average time to receive payment for companies in the
metals and construction sector stood at 335 days in 2016, 143
days in the information technology and electronics sector and 90
days in the petrochemical sector, the data showed.
Falcioni said a recent pledge by the government to settle
payments within 60 days was "optimistic", but that the
government was changing its policy to speed up payouts.
In the UAE, companies have also struggled with late
payments, with the rate of delays increasing between the first
quarter of 2015 and the third quarter of 2016, which Coface
attributed to liquidity pressures and a lack of funding from
"We expect this situation to remain for the first six months
of the year with some improvement in the second half of the year
in the chemical, petrochemical and food sectors," he said.
Firms in Saudi Arabia and the UAE have responded to stalled
payments by cutting labour costs, renegotiating contracts with
suppliers and making other cutbacks, he said.
A drying up of liquidity in the banking sector and a slump
in commodity prices prompted some expatriate businesses
operating in the UAE to flee the country with unpaid debt.
Coface registered 814 such cases between July 2015 and
December 2016, more than half of them in the general trading
($1 = 3.7504 riyals)
(Editing by Jason Neely)