Saudi Arabia wants to increase VAT and cut social benefits to compensate for the loss of revenue due to the sharp drop in oil prices. VAT will increase from five to 15 percent on July 1, Finance Minister Mohammed al-Jadaan announced today.
The monthly support payments to certain citizens of the Kingdom, which were introduced in 2018 due to rising prices, would be canceled in June.
Investments are canceled
Both are necessary because of the “sharp drop in demand” for oil on the world market following the pandemic, said Jadaan. The Government of the Kingdom will also cut further spending, the finance minister announced: Large infrastructure projects under the „Vision 2030“ reform program would be „canceled, stretched or postponed“.
The program aims to make Saudi Arabia more independent of oil export earnings. The kingdom is the largest oil exporter in the world.
