Saudi Ministry of Education to showcase innovations at 2025 Geneva International Exhibition    7,523 violators of residency, labor, and border security laws deported in a week    Video contradicts Israeli army account of deadly March 23 strike on Gaza paramedics    Saudi Arabia spends over $241 million to implement de-mining projects in 3 countries    Italy's Meloni government approves controversial security decree expanding police protections and penalties    Egypt submits new Gaza ceasefire and prisoner exchange proposal: Report    'Everything is possible' — Ronaldo focused on titles, not 1,000-goal milestone after Riyadh Derby win    Saudi, US military leaders discuss enhanced defense cooperation in Riyadh    King Salman Global Academy for Arabic Language launches program with Indiana University    Ronaldo brace powers Al Nassr past Al Hilal in Riyadh derby thriller    Ed Sheeran weaves Persian music into new song, Azizam    Al-Jadaan: Crown Prince's directives confirm government's ability to bring back balance to real estate market    Veteran Bollywood actor Manoj Kumar dies at 87    Foreign investors are allowed to engage in real estate business outside Makkah and Madinah Commercial speculation should not be the purpose of real estate transaction    Aubameyang fires Al Qadsiah into King's Cup final with stoppage-time winner over Al Raed    Musk's X is suing India, as Tesla and Starlink plan entry    Tesla sales plunge after backlash against Elon Musk    Danilo Pereira fires Al Ittihad into King's Cup final with dramatic stoppage-time double    Screen time in bed linked to insomnia, study finds    Mexico bans junk food in schools to fight childhood obesity epidemic    Sweet sales surge ahead of Eid as Saudi chocolate imports top 123 million kg in 2024    Bollywood actress vindicated over boyfriend's death after media hounding    Grand Mufti rules against posting prayers and preaching in mosques on social media    King Salman prays for peace and stability for Palestinians in Ramadan message King reaffirms Saudi Arabia's commitment to serving the Two Holy Mosques and pilgrims    Exotic Taif Roses Simulation Performed at Taif Rose Festival    Asian shares mixed Tuesday    Weather Forecast for Tuesday    Saudi Tourism Authority Participates in Arabian Travel Market Exhibition in Dubai    Minister of Industry Announces 50 Investment Opportunities Worth over SAR 96 Billion in Machinery, Equipment Sector    HRH Crown Prince Offers Condolences to Crown Prince of Kuwait on Death of Sheikh Fawaz Salman Abdullah Al-Ali Al-Malek Al-Sabah    HRH Crown Prince Congratulates Santiago Peña on Winning Presidential Election in Paraguay    SDAIA Launches 1st Phase of 'Elevate Program' to Train 1,000 Women on Data, AI    41 Saudi Citizens and 171 Others from Brotherly and Friendly Countries Arrive in Saudi Arabia from Sudan    Saudi Arabia Hosts 1st Meeting of Arab Authorities Controlling Medicines    General Directorate of Narcotics Control Foils Attempt to Smuggle over 5 Million Amphetamine Pills    NAVI Javelins Crowned as Champions of Women's Counter-Strike: Global Offensive (CS:GO) Competitions    Saudi Karate Team Wins Four Medals in World Youth League Championship    Third Edition of FIFA Forward Program Kicks off in Riyadh    Evacuated from Sudan, 187 Nationals from Several Countries Arrive in Jeddah    SPA Documents Thajjud Prayer at Prophet's Mosque in Madinah    SFDA Recommends to Test Blood Sugar at Home Two or Three Hours after Meals    SFDA Offers Various Recommendations for Safe Food Frying    SFDA Provides Five Tips for Using Home Blood Pressure Monitor    SFDA: Instant Soup Contains Large Amounts of Salt    Mawani: New shipping service to connect Jubail Commercial Port to 11 global ports    Custodian of the Two Holy Mosques Delivers Speech to Pilgrims, Citizens, Residents and Muslims around the World    Sheikh Al-Issa in Arafah's Sermon: Allaah Blessed You by Making It Easy for You to Carry out This Obligation. Thus, Ensure Following the Guidance of Your Prophet    Custodian of the Two Holy Mosques addresses citizens and all Muslims on the occasion of the Holy month of Ramadan    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Jobs, health priority in spending cuts, VAT hike: Al-Jadaan
Published in The Saudi Gazette on 11 - 05 - 2020

DUBAI — The health care and livelihood of the Saudi Arabian people are the main priorities for authorities, said Finance Minister Mohammed Bin Abdullah Al-Jadaan in an interview with Bloomberg, following the announcement of enormous spending cuts to combat the economic fallout of the coronavirus.
The Kingdom announced on Monday that it would cut spending by SR100 billion ($26.6 billion), raise triple value added tax to 15 percent from July 1, and suspend distribution of the cost of living allowance from June 1. The enormous cut to spending will be achieved through cancelling and postponing some projects, while also reducing spending on major projects and Vision 2030 goals.
"These are the priorities: the health care of people and the livelihood of people, and we want to make sure that we maintain our fiscal strength so that as the economy gets out of the lockdown, we are able to support the economy," Al-Jadaan told Bloomberg in a telephone interview.
Saudi Arabia remains in widespread lockdown as it aims to curb the spread of the COVID-19 coronavirus. Lockdown measures aimed at reducing the infection rates are having a detrimental effect on the economy, as businesses shutter and consumers are told to stay at home.
The minister stressed Saudi Arabia's commitment to reform and to retaining its fiscal strength and reserves so authorities will be able to support the economy once the lockdown has ended.
Al-Jadaan said that the spending cuts would come from reallocations, rather than wholesale budget cuts.
"What we would end up with as we are now, we would end up with spending almost as budgeted because of the increase in spending that we have allocated both to support the economy and the private sector and the jobs of Saudi employees in the private sector," the minister said.
Tripling of VAT
VAT, a tax that is added onto the cost of goods in shops, will raise from 5 percent to 15 percent from July 1.
Al-Jadaan said that the increase "is something that will help this year, but will help more next year and the year after as we get out of the COVID-19 crisis."
The increased revenue heading to state coffers as a result of VAT will likely not be significant this year, the minister continued, as consumers are not spending as much as normal while in lockdown.
Low oil price punch
Oil prices have witnessed a historic fall since the year began, with prices down around 60 percent. This has resulted in significant revenue drops for Saudi Arabia, which still relies on oil revenue for a significant portion of its budget.
The Kingdom's oil revenues fell 24 percent in the first quarter of this year to SR128.771 billion, while non-oil revenues fell 17 percent to SR63.3 billion.
As a result, Saudi Arabia slipped into a $9 billion budget deficit in the first quarter, and its central bank foreign exchange reserves fell in March at their fastest rate in at least 20 years and to their lowest level since 2011.
In response, authorities indicated that borrowing could increase by SR100 billion this year, to reach SR220 billion. Al-Jadaan indicated that there would be no need to increase borrowing beyond this.
"I think between that and cutting spending now and a few weeks ago, I think we will manage with 220 billion riyals," said the minister.
Impact on Vision 2030
The coronavirus pandemic will result in many projects slowing down, with supply chain issues and work restrictions both causing a significant impact.
"Some of the Vision programs, we have been working on with the strategic committee over the past few months and weeks to re-prioritize the initiatives under the Vision Realization programs. They have been revamped," Al-Jadaan said.
Spending on housing projects and in hospitality will continue, although "some of them will be postponed and extended to next year and the year after," the minister said.
The minister had said on May 2 in an interview with Al Arabiya that the Kingdom was prepared to take whatever "painful" measures necessary to mitigate the impact of the crisis, adding that we will see the impact of the pandemic and collapsed oil prices in the second quarter figures.
"Despite all that is taking place around the world, we are committed to continue our reform, we are committed to ensuring that we have the fiscal strength and maintain our reserves, maintain our fiscal buffers, so that as we get out of COVID-19 we have the tools to support the economy," Al-Jadaan told Bloomberg. — Al Arabiya English


Clic here to read the story from its source.