Saudi Arabia suspending cost of living allowance, raising VAT to mitigate economic impact of COVID-19 crisis

Saudi Finance Minister Mohammed Al-Jadaan. (SPA file photo)
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Updated 11 May 2020

Saudi Arabia suspending cost of living allowance, raising VAT to mitigate economic impact of COVID-19 crisis

RIYADH: Saudi Arabia is suspending the cost of living allowance and increasing the value-added tax (VAT) as part of measures to address the impact of the COVID-19 crisis, the Saudi Press Agency (SPA) reported on Monday.

“Cost of living allowance will be suspended as of June first, and the value added tax will be increased to 15% from 5% as of July first,” SPA said, citing statement of the Ministry of Finance.

Finance Minister Mohammed Al-Jadaan said the twin measures are part of efforts to shore up state finances, which have been battered by low oil prices and the coronavirus crisis.

Al-Jadaan warned last week that Saudi Arabia would have to take "strict and painful measures" to deal with the twin impact of coronavirus pandemic and falling world oil prices.

“We must reduce budget expenditures sharply,” Al-Jadaan said, adding that some government projects may be slowed down to reduce expenditure.

“Current actions taken to date to cut spending are not enough, and Saudi public finances will need more control and the journey ahead is long," he said.

The pandemic has wrecked the global economy, leaving millions out of work, with the US alone reporting more than 20 million people becoming unemployed in April.

Worldwide, the COVID-19 has infected more than 4.18 million people as of early Monday, with the death toll surging to 283,000 since the coronavirus was first detected in Wuhan, China last December.

In Saudi Arabia, the number of infections rose to 39,048 as of Sunday, of which 27,345 were active cases and 11,457 have recovered.

The Health Ministry reported 7 new deaths on Sunday, all expatriates, raising the death toll to 246.

Saudi crown prince says COVID-19 will pass

Updated 25 May 2020

Saudi crown prince says COVID-19 will pass

  • Crown Prince says he believes the bad times will soon pass
  • Tells government officials he regrets not being there in person

RIYADH: Saudi Arabia’s Crown Prince Mohammed bin Salman has exchanged Eid greetings with senior government officials, saying that he believed the “bad (coronavirus) conditions will pass,” adding “we are heading towards the good, state news agency SPA reported.

“What pains me this Eid, is that it’s a day of joy and it’s our duty as Muslims to rejoice and I couldn’t be with you today,” the crown prince said during a video call with senior Ministry of Defense officials on Sunday.

“But the bad conditions will pass, God willing, and we are heading towards the good, God willing. This is thanks to the fortitude of the men of Saudi Arabia, both military and civilians.”

Saudi Arabia celebrated the first day of Eid al-Fitr in a state of 24-hour lockdown, imposed last week to slow the spread of COVID-19.

Earlier King Salman thanked people in Saudi Arabia for abiding by the curfew.

“I greatly appreciate you celebrating Eid while staying at home and practicing social distancing,” he said on Saturday in a speech delivered by acting Minister of Media Majid al-Qasabi.