Moody's credit rating agency noted the measures announced by the Kingdom of Saudi Arabia, expecting these measures to help offset a portion of the lost revenue resulting from the large decline in oil prices, and the decline in oil production resulting from the OPEC Plus agreement.
In this context, Alex Bergesey, Vice President and Chief Analyst of the Agency, pointed out that "These measures highlight Saudi Arabia's ability to deal with economic shocks," explaining that "the reduction of new spending, with those that were announced last March, and the other that was approved in the 2020 budget, equivalent to about 8% of the Kingdom's GDP.
Mr. Bergesey considered that "the decision regarding increasing the value-added tax to 15%, will contribute to increasing the state's revenues by about 5% of the gross domestic product annually," stressing that "the increase in the value-added tax will negatively affect sustainable consumption rates and this will also enhance the negative economic impact resulting on the decline in oil prices, and the measures taken to combat the Corona epidemic."
Saudi Arabia announced a package of measures, including raising the tax and stopping the cost of living allowance, and decided to stop the cost of living allowance starting from next June, and raising the value-added tax rate from 5% to 15% starting from next July.
Source (Al-Arabiya.net website, Edited)
