Posted by : Aahil Shaik Monday, May 11, 2020
Suspending Cost of Living allowance, Raising VAT to reduce impact on Economy due to Coronavirus Pandemic
The Minister of Finance and the Minister of Economy and Planning in charge, Mohammed bin Abdullah Al-Jadaan, explained the importance of 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. Most viewed : Saudi Arabia reduces oil prices locally for May 2020
Saudi Arabia is suspending the cost of living allowances starting from June 2020 and increasing the Value Added Tax (VAT) from 5% to 15% from the beginning of July 2020. These are the important measures that have been announced by the Minister of Finance.
- He highlighted the importance of the measure undertaken in order to protect the Saudi economy and overcome the unprecedented financial and economic ramifications of the global coronavirus pandemic in the possible best way, stressing that these measures complement previously made decisions to reduce the negative effects of crisis from a health perspective as well as economically and socially. Recommend : Zamzam water to be distributed all over the Kingdom
- The impact of approved measures is around 100 billion Saudi Riyals, the decision included canceling, extending or postponing some items of operational and capital expenditures to a number of government departments and reducing the credits of a number of initiatives to achieve vision and major projects for the fiscal year 2020.
- The Minister said the crisis caused by the global pandemic resulted in 3 economic shocks,
1. The unprecedented decline in oil demand, which led to lower oil prices and a sharp decline in revenue generated from oil, which was the main source of government revenue for the state budget. See Also : Saudi Arabia ranks 12th in terms of internet speed worldwide
2. The necessary precautionary measures undertaken to protect the lives of citizens and expatriates to prevent the spread of the pandemic, which led to the suspension or reduction of many local economic activities, which had a negative impact on non oil revenue and economic growth.
3. The unexplained expenses that required government intervention by increasing provisions for the healthcare sector to support the preventative and treatment capacity of health services. Read : Coronavirus vaccine is not expected until the end of 2021
- The measures taken today, even if there is pain, they are necessary and will be beneficial to maintain financial and economic stability from a comprehensive perspective and in medium and long term in the interest of the country and its people.