Saudi Arabia poised to launch cash-transfer programme for citizens

The government of Saudi Arabia yesterday announced the launch of a cash-transfer programme aimed at low- and middle- income citizens.

The Citizen’s Account intends to implement a cash transfer programme for poorer citizens as it gradually raises domestic energy prices under a plan to repair public finances and reduce the economy’s reliance on oil.

Monthly cash payments will be made to eligible Saudi households on December 21, authorities said.

The programme is designed to compensate families hurt by austerity measures, the cabinet said. It aims to relieve the effect of economic reforms affecting petrol prices, electricity tariffs, and value added tax on food and beverage items.

The statement also said that the first payments will be given before the next rise in energy prices, and would not affect any government support payments received by the households.

The Citizen’s Account programme was first announced by the government in December last year and was opened for registration in February.

Saudi ministers approved the programme, which will be reviewed quarterly, at the same time they ratified a gradual change in prices of energy and electricity products, which will start on January 1.

The government is offsetting the effect on family incomes as it implements an economic overhaul triggered by the sharp drop in oil revenue in 2014. To avoid a run on reserves, authorities canceled projects deemed unnecessary, cut costly subsidies and plan to introduce VAT.

Allowances will be paid to eligible families before the implementation of any economic reforms. The criteria specifies that beneficiaries must be citizens of Saudi Arabia and must permanently reside in the country.

Eligible beneficiaries are Saudi families, individuals living independently, beneficiaries of social security and Saudi mothers married to foreigners. The government said payments would vary depending on the size and income of each family.

The scheme is considered vital in advancing the economic transformation of Saudi Arabia’s Vision 2030, the adopted methodology and road map for economic and developmental action in the kingdom. Crown Prince Mohammed bin Salman is leading the efforts to reduce the kingdom’s dependency on oil. His plan includes a drive to raise nonoil revenues and sell stakes in state-owned companies, including Saudi Aramco.