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 data of the "Mubasher" website specialized in financial affairs, the banking sector decreased by 3.19%, the basic materials sector declined 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.
Al-Jadaan said earlier this month that "the sustainability of the public finances requires taking tough and painful measures" to face the economic downturn due to the spread of the Coruna virus and the collapse of oil prices.
Last April, the International Monetary Fund expected the economy of the kingdom, the largest in the region, to contract by 2.3%.
The losses today included all other major markets in the Gulf as well, as the Dubai market fell 2.3%.