` Saudi Arabia to increase VAT, suspend cost of living allowance
Saudi Arabia and Corona virus: Value-added tax tripled to tackle epidemic, housing allowance suspended



Saudi Arabia has made "painful" decisions to triple the value-added tax (VAT) and suspend housing allowances for government employees to revive its Corona-infected economy.

Saudi Arabia's revenues have declined due to global epidemics and lower oil demand and prices in international markets. It is one of the largest oil exporters.

Saudi Arabia introduced the VAT two years ago to reduce its economy's dependence on global crude oil markets. The housing allowance will also be suspended from June 1. The emergency plan is expected to raise 26.6 billion.

Finance Minister Mohammed al-Jadan said in a statement: "These measures are painful but necessary to achieve financial and economic stability in the medium and long term. And the corona virus crisis can be overcome with minimal damage.

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He also said that under the government's austerity drive, the expenditure of some institutions was being "suspended, postponed or extended". The costs of the Vision 2030 reform program have also been reduced.

According to AFP news agency, the austerity drive could provoke public outrage as the country already has billions of dollars in new housing projects that have pushed up living costs. Meanwhile, suggestions have been made to buy English football club Newcastle United.

A committee has been formed which will review the incentives available to government officials and contractors within 30 days and give its recommendations.

University of Cambridge professor John says: "In a major economic crisis, tripling VAT to balance income and expenditure will be a test. These are austerity measures to increase revenue, not increase productivity.

The announcement comes at a time when spending in the country has exceeded revenue. In the first three months of this year, Saudi Arabia's budget deficit was ارب 9 billion.

This is when oil revenues fell by almost a third this year compared to the same period last year, a difference of 34 34 billion. As a result, total revenue fell by 22%.

According to economist Hasnain Malik, the increase in VAT will increase علاوہ 24 to .5 26.5 billion in non-oil revenues, which will affect people's ability to spend money but will lead to economic stability.

Meanwhile, foreign reserves in Saudi Arabia's central bank have dwindled. In March, it fell the fastest in two decades and reached its lowest level since 2011.

Measures to prevent and combat the corona virus are expected to affect the pace and scope of economic reforms introduced by Saudi Prince Mohammed bin Salman.

Last year, Riyadh's stock market saw a sharp rise in shares of Saudi Arabia's largest oil company, Aramco. The giant made .6 25.6 billion from the sale of its shares.

Remember that Aramco produces one tenth of the world's crude oil.

The sale of shares was an important part of Saudi Prince Mohammed bin Salman's economic plan. The Saudi royal family sold Aramco's shares to reduce its dependence on oil and modernize the economy.

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