The whole world is troubled by the coronavirus infection. During this time the economy of the countries has also been badly affected. There is no country whose economy has not deteriorated. The countries that have taken the first step for lockdown and the lockdown has been implemented so far have suffered more losses. The countries which have late lockdown have increased the death toll.
Now all the countries are taking all kinds of measures to get their country’s economy back on track due to Coronavirus infection. In this series, Saudi Arabia has decided to increase the Value Added Tax (VAT) three times. The most affected US has decided to open a lockdown soon so that the economy can improve.
Cost of living allowance also stopped
Saudi Arabia has also stopped the Cost of Living Allowance (CLA) for government employees, along with raising the value-added tax so that the fiscal deficit can be reduced. In fact, oil prices have fallen due to the lockdown, which has caused considerable damage to Saudi Arabia. Saudi Arabia implemented VAT only two years ago. Saudi Arabia’s intention behind implementing this was to reduce its dependence on the worldwide crude oil markets.
5 to 15 per cent VAT
According to a report by the Saudi government news agency, the VAT rate has increased from five per cent to 15 per cent. Now, these new tax rates will also be applicable from July 1. Coronavirus has caused damage to Saudi Arabia due to falling oil prices. In this statement, Saudi Arabia’s Finance Minister Mohammed Al Jadan said that these changes are troublesome but in the long run, it is very important for financial and economic stability, so that we can get away from the odd situation of Coronavirus crisis. You will be able to recover from the situation created with minimal loss.
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Oil sinks economy, budget deficit reaches $ 9 billion
This announcement has been made by the Finance Minister when the government expenditure has exceeded the income and in the first three months of the year, the country’s budget deficit was $ 9 billion. The main reason behind this is the fall in crude oil prices. Oil prices fell in the first quarter and this had an impact on the Saudi economy. Saudi Arabia’s revenue fell 22 per cent as oil prices fell.
The month of March saw Saudi Arabia’s central bank also witness the steepest drop in overseas deposits. Never before has Saudi Arabia seen such a huge decline in foreign deposit capital in two decades. This is the first time since 2011 when the current situation has happened.
The Crown Prince believes that the new rules that have created to deal with the situation created by the Corona crisis will slow down the growth rate. Still, it also expected that the step was taken for economic reforms on a large scale will be implemented. Last year, Saudi Arabia raised $ 25.6 billion through a plan for public participation in the shares of state-run oil company Aramco.
The plan to sell the shares of the oil company was a major part of the Crown Prince’s plan through which he wants to modernize the country’s economy and reduce the country’s dependence on oil only. The coronavirus causing havoc, Saudi Arabia currently has 40 thousand cases of that coronavirus infection.
