Saudi Arabia Imposes Austerity Measures: WSJ

Countries around the world have their hands full responding to the Covid-19 pandemic and cannot afford missteps in other areas. In early March, OPEC nations failed to reach agreement with non-OPEC nations to limit oil production, and Saudi Arabia responded by opening the pumps, forcing prices to plummet. The oil producers later reached agreement to limit production, but it was too late. Two months later, Saudi Arabia is tripling its value-added tax rate to 15 percent and introducing austerity measures. “The measures are aimed at making up the difference between lower-than-expected revenues and higher spending to combat the impact of the new coronavirus, including wage support for workers and loan postponements for companies,” reports the Wall Street Journal. “But they risk fueling discontent just as the world’s top oil exporter faces its worst financial predicament in decades.” The crisis forces Saudi Arabia to draw on foreign reserves, borrow and reduce spending. The country also announced another crude oil production cut in an attempt to stabilize prices. – YaleGlobal