Saudis adopt more measures to mitigate virus impacts
Full curfew from May 23
RIYADH, May 13, (KUNA): Saudi Minister of Finance and Acting Minister of Economy and Planning Mohammad Al-Jadaan on Sunday highlighted the importance of the measures undertaken to protect the Saudi economy and overcome the financial and economic ramifications of the novel coronavirus pandemic.
These measures complement previously made decisions to mitigate the negative effects of the crisis from a health perspective, as well as economically and socially, he said in a press release carried by the Saudi Press Agency.
The government is committed to taking necessary and timely measures to protect citizens and residents, as well as the economy to mitigate the effects of the crisis and its ramifications, Al-Jadaan affirmed.
The Minister emphasized that the crisis caused by the global pandemic resulted in three economic shocks, each of which could in itself have an extremely negative effect on the performance and stability of public finance had the government not intervened by taking measures to absorb them.
He explained that due to the precautionary measures undertaken worldwide to combat the pandemic, the first economic shock was the unprecedented decline in oil demand, which led to lower oil prices and a sharp decline in oil revenue that represents a main source of public revenue for the state budget.
Secondly, the necessary precautionary measures undertaken to protect the lives of citizens and residents and to prevent the spread of the pandemic have led to the suspension or reduction of many local economic activities, which had a negative impact on non-oil revenue and economic growth.
Thirdly, the economic shock was the unplanned expenses that required government intervention by increasing provisions for the healthcare sector to support the preventative and treatment capacity of health services, in addition to the adoption a number of initiatives to support the economy, mitigate the economic effects of the pandemic and maintain jobs for citizens.
The Minister stated that these challenges combined have led to a decline in public revenue and exerted pressure on public finances in a way that could not be dealt with later without causing harm to the overall economy of the Kingdom
in the midsummer and long-term. Therefore, further reduction in expenditures is needed, as well as undertaking measures that support the stabilization of non-oil revenues.
Accordingly, the Ministry of Finance and the Ministry of Economy and Planning have presented these financial and economic developments and the proposed measures to tackle them; and a directive has been issued to undertake the most suitable and least harming measures.
The impact of the approved measures is around 100 billion Saudi riyals; including cancelling, extending, or postponing some operational and capital expenditures for some government agencies, as well reducing provisions for initiative of a number of Vision Realization Programs and major projects for the fiscal year (1441-1442) -(2020). In addition, the costof-living allowance shall be discontinued as of June 2020 and VAT shall increase from 5% to 15% as of July 2020.
Also, to improve spending efficiency, a ministerial committee has been established to study the financial benefits paid to all employees, contractors and those of similar status whom are not subject to Civil Service Law in government ministries, institutions, authorities, centers, and programs, and present its recommendations within 30 days.
“We are facing a crisis the world has never seen the likes of which in modern history, a crisis marked by uncertainty and difficulty to forecast its range and ramification,” he said, noting that the daily developments require vigilance, suitable timely responses and adaptation to the evolving situation.
“These measures are necessary and beneficial to maintain comprehensive financial and economic stability in the medium and long term for the interest of the country and its citizens,” Al-Jadaan added.
Meanwhile, Saudi authorities have decided to enforce full curfew in all regions and cities and towns as of May 23 until May 27, a source at the ministry of interior said on Tuesday.
The source, cited by the official Saudi Press Agency (SPA), urged the people of the kingdom to continue to adhere to anti-coronavirus measures, namely social distancing and abstention from gatherings of more than five persons.