The Kingdom of Saudi Arabia announced yesterday the suspension of the cost of living allowance starting from next June, as well as raising the value-added tax rate from 5% to 15% starting from the first of the same month. The Minister of Finance and the Minister of Economy and Planning, Muhammad bin Abdullah Al-Jadaan, stressed the importance of The measures aimed at protecting the Kingdom's economy to overcome the unprecedented global crisis of the Corona pandemic and its financial and economic repercussions with the least possible damage, indicating that these measures come as a complement to the decisions taken in advance to limit the aggravation of the negative effects of the crisis from 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 significant change in 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 precautionary measures shocked the first , Represented by an unprecedented decline in the demand for oil, which negatively affected the price level, and led to a sharp decline in oil revenues, which is a great source of public revenue for the state budget.
He added that the second shock was the cause of the necessary preventive measures taken to preserve the lives and safety of citizens and residents, and to prevent the spread of the pandemic, in the stoppage or decline of many local economic activities, and this reflected negatively on the size of non-oil revenues and economic growth.
He added that the three of these shocks affecting the public finances were the urgent needs on the side of unplanned expenditures, which 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, and mitigate the impact of the pandemic , And to preserve citizens' jobs.
He pointed out 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, and therefore more spending must be achieved, and measures to support the stability of non-oil revenues Accordingly, the ministries 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.
He pointed out that the impact of the approved measures amounted to approximately 100 billion riyals, 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 current fiscal year.
He stressed that the world is living in a crisis that has not been witnessed before in modern history, among the most important characteristics of which are uncertainty and the difficulty of 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 quickly respond and adapt to conditions, In a way that realizes the public interest, protecting citizens and residents, and providing the basic needs and necessary medical services, explaining that the measures that have been taken, even if they are in pain, are necessary, and will be beneficial for maintaining financial and economic stability from a comprehensive perspective, and for the two Medium and long, in the interest of the country and citizens.
Saudi Minister of Finance and Economy:
• "The world is in a crisis that has not been witnessed in modern history."
• “The government continues to take the necessary decisions to protect citizens and residents.”