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

Saudi Arabia Imposes Austerity Measures: WSJ

Saudi kingdom boosts taxes to make up for lower oil revenues and cuts oil production; moves risk fueling discontent
Stephen Kalin and Donna Abdulaziz
Monday, May 11, 2020

Saudi Arabia:  Covid-19: Confirmed Cases: 	41,000 Deaths 255
(Source: Johns Hopkins Center for Systems Science and Engineering)

Read the article from the Wall Street Journal about austerity measures in Saudi Arabia.

Stephen Kalin is a Middle East correspondent covering Saudi Arabia and the Gulf from Riyadh and Dubai. He has lived in the region since 2009. Donna Abdulaziz is a news assistant for the Wall Street Journal.

Value-Added Taxes, Selected Nations: Saudi Arabia	15% Russia	20% France	20% UK	20% India	5.5% Germany	19% Japan	10% China 	13% US 	0%
Value: Investopedia defines a value-added tax as a consumption tax placed on products as value is added at each stage of the supply chain - but nations also list exemptions and reduced rates for goods like groceries or specific locations (Source: Wikipedia)

© 2020 Dow Jones & Company Inc. All Rights Reserved.