The general index of Saudi stocks fell sharply in early transactions after the kingdom said it would increase the value-added tax to three times as much and suspend the cost of living allowance for state employees in order to strengthen its financial conditions.
The index fell about 2.8% at 07:27 UTC, before reducing some of its losses later.
According to the site “direct” data specialist in finance, banking sector it declined by 3.19%, as the basic materials sector fell by 2.61%, while the energy sector fell by 2.09%, at around 7:20 UTC.
Today, Monday, Finance Minister Mohamed Al-Jadaan announced that the Kingdom decided to raise the value-added tax rate and suspend the cost of living allowance, as part of new austerity measures imposed by the outbreak of the new Corona virus.
“It was decided to stop the cost of living allowance starting from June 2020, as well as raising the value-added tax rate from 5% to 15% starting from July 1,” the official Saudi Press Agency (SPA) quoted the minister as saying.
The austerity measures come at a time when the country – which is the largest oil exporter in the world – is suffering the repercussions of a collapse in crude prices, at a time when it is responding to the outbreak of the emerging Corona virus.
Was Jadaan said earlier this month “fiscal sustainability requires taking strict measures may be painful” to face the economic downturn because of the corona virus outbreak and the collapse of oil prices.
In April / last April, the IMF forecast that the economy will contract her kingdom’s largest economy in the region by 2.3%.
The losses today included all other major markets in the Gulf as well, as the Dubai market fell 2.3%.