Saudi Arabia announced a package of measures, including raising the tax and stopping the cost of living, in the framework of protecting the Kingdom's economy from the negative effects of the recent outbreak of the Corona virus.
The Minister of Finance and the Minister of Economy and Planning in charge, Mr. Mohammed bin Abdullah Al-Jadaan, explained the importance of the measures aimed at protecting the Kingdom's economy to overcome the unprecedented global Corona pandemic crisis and its financial and economic repercussions with the least possible damage, according to the Saudi Press Agency "SPA".
He stressed that these measures come as a complement to the decisions taken in advance to reduce the aggravation of the negative effects of the crisis in its various health, social and economic aspects.
He stated that the government continues to take the necessary decisions to protect citizens, residents and the economy early to reduce the aggravation of the crisis and its consequences.
He stressed that the global crisis of the pandemic spread caused three shocks to the Kingdom’s economy, each of which is capable of bringing about a change affecting the performance and stability of public finances unless the government interferes with measures to absorb these shocks, indicating that the spread of the epidemic and the measures taken by the countries of the world from the precautionary measures were the first shock represented in An unprecedented drop in demand for oil negatively affected the price level and led to a sharp drop in oil revenues, which is a major source of public revenue for the state budget.
The second shock was that the necessary preventive measures taken to preserve the lives and safety of citizens and residents and prevent the spread of the pandemic caused many local economic activities to stop or decline, and this negatively affected the volume of non-oil revenues and economic growth.
As for the third of these shocks affecting the public finances, they were the urgent needs on the side of the unplanned expenditures that required government intervention by continuously increasing funds for the health sector to support the preventive and curative capacity of health services. In addition to adopting a number of initiatives to support the economy, reduce the impact of the pandemic, and preserve the jobs of citizens.
Minister Al-Jadaan indicated that these challenges combined led to a decline in government revenues, and pressure on public finances to levels that are difficult to deal with later without harming the kingdom’s macroeconomics and public finances in the medium and long term. Therefore, further reductions in expenditures must be achieved, and measures to support revenue stability Non-oil and accordingly, the Ministry of Finance and Economy and Planning presented the financial and economic developments and the proposed measures to confront these developments. The directive was issued to take the most appropriate, least harmful and lighter measures.
The impact of what has been approved of measures amounted to approximately 100 billion riyals, including: 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 2020.
In addition, it was decided to stop the cost of living allowance starting from June 2020, and also to raise the value-added tax rate from (5%) to (15%) starting from the first of the month of July 2020.
To increase the efficiency of exchange, a ministerial committee was formed to study the financial benefits that will be spent on all civil employees, contractors, and similar persons who are not subject to the civil service system in ministries, departments, institutions, bodies, centers, and government programs, and to raise recommendations within (30) days from its date.
Minister Al-Jadaan concluded his statements by explaining that we are facing a crisis that the world has not witnessed in modern history. One of its most important characteristics is uncertainty and difficulty in knowing and anticipating its extent and repercussions in light of daily developments that require governments to deal with them with vigilance and the ability to take appropriate decisions at appropriate times and speed of response and adapt to conditions. In a way that achieves the public interest, protecting citizens and residents, and providing the basic needs and necessary medical services, and that the measures that were taken today, even if there is pain, are necessary and will be, God willing, beneficial to maintain financial stability and trust. Opercular from a comprehensive perspective on the medium and long term, for the benefit of the homeland and citizens.