Saudi Arabia has begun paying hundreds of millions of dollars in arrears to drug suppliers. The government has signed 156 deals worth 666 million riyals ($177.6 million) with foreign drug firms, to be paid in 1996, reports Saudi television; the suppliers were asked to meet delivery dates and present bills on time for payment in this fiscal year.
Reuters notes that Gulf War liabilities and soft world oil prices led to the mounting debt. Industry sources quoted by the service say the figure represented payments for drugs delivered by suppliers under contract in 1996. However, it was not clear if payments would cover part of previously-incurred debts. Saudi Arabia is one of the Middle East's top drug consumers, with a market worth over 3 billion riyals ($800 million) annually; local production accounts for under 15%.
Debts Put At $1-$3 Billion European and US firms have repeatedly asked the Saudi government and its health and finance ministries to settle the arrears, which go back to 1993 and, say industry sources quoted by Reuters, are close to $1 billion, although Saudi American Bank chief economist Kevin Taecker puts debts to suppliers and contractors closer to $2-$3 billion. The cabinet recently resolved to pay $2-$3 billion in amounts owed to contractors and suppliers at a rate of 20% a year over five years in cash but without a promissory note; in 1995 the government began issuing special bonds to help pay the $5 billion then estimated to be outstanding to contractors. Mr Taecker said the Finance Ministry paid up to $6 billion of the arrears in cash, bonds and special payment certificates since March 1995 to contractors and farmers.
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