Saudi Arabia decided to stop the exchange of the high cost of living for its citizens starting from next June, as one of the tools to rationalize the spending that it started implementing recently, in order to meet the decline in revenues resulting from the drop in oil prices and the economic consequences of the Corona pandemic.
The measures were also included in raising the value-added tax rate from 5 percent to 15 percent, starting in July 2020, the official Saudi Press Agency (SPA) quoted Finance Minister Mohamed Al-Jadaan as saying.
Al-Jadaan said that the measures will be important to protect the Kingdom’s economy, “and bypassing the unprecedented global crisis of the Corona pandemic and its financial and economic repercussions, with minimal damage possible.”
These measures come as a complement to the decisions taken previously to freeze activities and other cancellations, to reduce the aggravation of the negative effects of the crisis in its various health, social and economic aspects on the country.
And caused the three shocks on the Kingdom, represented by an unprecedented decline in demand for oil, and the stoppage or decline of many local economic activities, due to measures to tackle the virus, and emergency needs on the side of unplanned expenditures, especially for the health sector.
Al-Jadaan said: “The value of austerity measures amounted to 100 billion riyals ($ 26.66 billion), which included canceling, extending or postponing some items of operating and capital expenditures to a number of government agencies, and reducing the credits of a number of initiatives to achieve the vision and major projects for the fiscal year.”
He concluded: “We are facing a crisis that the world has not witnessed in recent history, among the most important characteristics of which are uncertainty, difficulty in knowing and anticipating its extent and repercussions, in light of daily developments that require governments to deal with it with vigilance.”
The Saudi budget recorded a deficit of 34.1 billion riyals ($ 9.1 billion) during the first quarter of this year, while the public debt rose 6.7 percent to 723.5 billion riyals ($ 192.9 billion) at the end of the first quarter, on an annual basis.
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