79981
Citizens are complaining about rising prices.
Citizens are complaining about rising prices.

Saudi Handouts to Wipe Out Savings

Saudi Handouts to Wipe Out Savings

Saudi authorities may have underestimated the financial cost of handouts doled out to citizens complaining about rising prices, according to Bank of America Merrill Lynch.
The government will spend 61.8 billion riyals ($16.48 billion) on a package that included paying civil servants a monthly 1,000-riyal allowance for a year and restoring annual pay raises suspended in 2017, London-based economist Jean-Michel Saliba wrote in a report. Officials said the package would cost about 50 billion riyals, Bloomberg reported.
King Salman issued the order this month after public complaints about the impact of higher fuel prices and the introduction of a 5% value-added tax. The measures will likely make the government more reliant on higher oil prices to boost revenue, chipping at the credibility of Crown Prince Mohammed bin Salman’s plan to end the economy’s addiction to hydrocarbons.
“Nearly all announced payments risk having a permanent impact on the budget,” Saliba wrote. “They may not be phased out in a year, especially as they set a precedent and their re-introduction or continuation would be anticipated by Saudi nationals if further fiscal reform efforts push inflation higher.”
The government will also pay part of the newly introduced VAT recently implemented to help diversify state revenue. The measures will almost wipe out savings planned in this year’s budget, according to Cairo-based investment bank EFG-Hermes.
Meanwhile, Saudi Arabia’s sovereign wealth fund, which aims to become a $2 trillion investment giant, is considering borrowing from banks for the first time as it seeks investments in the kingdom and abroad, according to people familiar with the matter.
The Public Investment Fund has held talks with local and international banks and could raise about $5 billion this year, some of the people said, asking not to be identified because the information is private.

Short URL : https://goo.gl/nS93M4
  1. https://goo.gl/CXQm9E
  • https://goo.gl/WwQ4pA
  • https://goo.gl/oKBr65
  • https://goo.gl/KXq5m3
  • https://goo.gl/JX3NgT

You can also read ...

While China tries to alleviate its demographic crunch, the aging society means a pension shortfall.
Forget that image of sweatshops making all kinds of cheap...
Russia Economic Recovery Underway
Retail sales in Russia picked up in April, while real wages...
In 2017 banks had total mortgage lending of around $352 billion.
High levels of household debt are the greatest risk to Sweden’...
Greece at Crucial Point
Discussions are heating up over future debt repayments for...
Saudi Gov’t Told Not to Boost Spending
The International Monetary Fund urged the Saudi government not...
Peru Economy Strengthens
Economic growth in Peru strengthened in the first quarter...
Brazil CB Keeps Rates on Hold
Brazil’s central bank considered cutting interest rates last...
EU Tells Italy to Cut Debt, Warns of Euro Spillover
Italy’s incoming government should aim to cut its heavy public...

Add new comment

Read our comment policy before posting your viewpoints

Trending

Googleplus