Coronavirus: Saudi Arabia says salaries not affected by austerity measures

Dubai: Saudi Arabia’s latest painful austerity measures will not affect the allowances and salaries of employees, according to the daily Okaz newspaper.

The government is committed to paying the salaries and allowances of its employees on their fixed date every month. The suspension of the cost of living allowances is part of the recent austerity measures in line with the current circumstances, as the allowances are considered additional support to the salaries of employees.

In ongoing efforts to maintain the pace of development while announcing fiscal austerity measures, Saudi Arabia has decided on a 30 billion Saudi riyals (Dh29.3 billion) reduction in the budgets of the kingdom’s 13 Vision Realisation Programs (VRPs) and mega projects.

The reduction is part of a major plan to cut major operational and capital expenditures by approximately SR100 billion to mitigate the impacts of the novel coronavirus pandemic.

Despite the reduction in spending on VRPs and major projects, the work progress and timeline will continue as planned, noting that the government has identified 10 programs of strategic importance to the Saudi Vision 2030.

The Saudi government has also allotted SR177 billion to support the health sector as well as to lessen the impact of the COVID-19 pandemic on the private sector and not to affect the salaries of government employees.

The newspaper expects that reviewing the allowances of government employees would bring down spending on government agencies, institutions and programs.

The kingdom’s on-oil exports has seen a 31.7 per cent drop during the period from April 1 to 22, while noting that the government did not resort to cutting the allowances or salaries of employees.

On Monday, the government increased the value-added tax (VAT) from 5 per cent to 15 per cent as part of plans to generate more revenues. The new expenditure cuts, together with those announced in March and approved in the 2020 budget, correspond to almost 8 per cent of the kingdom’s GDP.

Meanwhile, the government’s decision to increase the value-added tax rate to 15 per cent, would generate additional revenues of up to 5 per cent of the kingdom’s GDP every year.