Economics
A Radical Shift May Worsen Saudi Arabia’s Economic Crisis
- Kingdom announced tax increases and spending cuts on Monday
- Moves come as oil slump batters economy; may prompt backlash
Photographer: Fayez Nureldine/AFP via Getty Images
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Saudi Arabia’s economic downturn is about to worsen. Already reeling from the slump in oil prices and lockdowns to halt the spread of the coronavirus, the kingdom has now increased taxes and cut spending.
While the government says overall expenditure will remain broadly in-line with the 1 trillion riyals ($266 billion) outlined in the 2020 budget, tripling value-added tax and cutting bureaucrats’ allowances will damage consumption and hurt the private sector that is key to Crown Prince Mohammed Bin Salman’s vision to diversify the economy away from oil.