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Saudi Arabia Imposes Austerity Measures

VOA News

   Saudi Arabia says itis triplingitsVAT(value added tax)and
   suspendingcost-of-living allowances.

   Riyadhsaidis initiating the austerity measures tooffsetdwindling
   coffers caused by the costs ofdealing with theCOVID-19pandemicand the
   turndown in global energy prices.

   "These are the priorities: the health care of people and the livelihood
   of people," Finance Minister Mohammed Al-JadaantoldBloomberg News
   Monday. "We want to make sure that we maintain our fiscal strength so
   that as the economy gets out of the lock-down, we are able to support
   the economy."

   Thetwo-year-oldVAT will increase from 5% to 15%, beginning July 1.The
   imposition of the higher taxcomesas residents of the kingdomare dealing
   with reduced incomesdue tofurloughs and pay cutscaused by
   thenewcoronavirus.

   In June, state workers will stop receivingtheir cost-of-living
   allowances.

   "These measures are painful, but necessary," the finance minister said.

   The BBC reports Saudi Arabia's state spending surpassed its income in
   the first three months of this year, leaving the kingdomwitha $9
   billion deficit.

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