Discontent spreads after Saudi announces austerity measures

Saudi citizens expressed widespread discontent and concerns after the government’s decision to triple the rate of value-added tax (VAT) and cancel benefits, in the latest austerity measures announced to confront the financial crisis.

Activists said that increasing the rate of VAT from five to 15 per cent and cancelling allowances will lead to a real catastrophe for a large segment of society. Warning that households whose income does not exceed 3,000 riyals ($800) cannot bear a rise in expenses.

Others defended the decision, saying the austerity measures mark the beginning of a renaissance, which will ultimately benefit all citizens.

Finance Minister, Abdullah Al-Jadaan, announced on Monday a number of measures to help boost the state’s coffers and tackle the slump in income. This, he explained, comes in light of “an unprecedented crisis in recent history, among the most important characteristics of which is uncertainty, the difficulty to know or anticipate its extent and repercussions, in light of daily developments that require governments to be vigilant and make appropriate decisions at an accurate timing.”

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In a message to the Saudi people, Al-Jadaan said that “these decisions are painful but necessary, and they will be useful, God willing, to maintain financial and economic stability from a comprehensive perspective, and in the medium and long term, for the benefit of the nation and citizens.”

This comes as the kingdom confronts the financial and economic repercussions of the coronavirus pandemic and the near-collapse of oil prices.