The Kingdom of Saudi Arabia (KSA) paid 2 billion riyals
($533 million) on Thursday in the first monthly installment of a new
welfare system for low and middle-income families that make up
approximately half of the kingdom's population.
The
payments come ahead of the introduction of a 5 per cent value-added tax
on most goods, like food and services, as well as subsidy cuts that will
raise the price of electricity and gasoline next year.
Saudi
Minister of Labor and Social Development Ali al-Ghafees told the
state-run Saudi Press Agency that bank transfers were made to
approximately 3mn families, reaching around 10.6mn beneficiaries.
He
said half of those families received the maximum payment of 938 riyals
($250). The minimum payment is 300 riyals ($80). Around 20pc of those
who applied for the assistance did not qualify, however.
The
payouts come two days after the government announced plans for the
biggest budget in the kingdom's history, with plans to spend at least
978 billion riyals ($261bn) this coming fiscal year. The government
already introduced a tax on tobacco products, soft drinks, and energy
drinks this year, as well as a tax on luxury goods.
The government said it expects to pay approximately 32bn riyals ($8.5bn) on the Citizen's Account payments in 2018.
Despite
major spending plans, government revenues are expected to reach 783bn
riyals ($209bn), leaving a 7pc budget deficit amid continued lower oil
prices from their highs in early 2014.
Some 210bn riyals
($56bn) are being earmarked for military spending, representing just
over a fifth of overall state spending next year. Saudi Arabia is one of
the world's biggest military spenders and it's nearly three-year-long
war in Yemen has been costly.
The government, meanwhile,
has slowed down some of its austerity measures and its timeline for a
balanced budget, to give families time to adjust to the price hikes and
taxes. A freeze on public sector wage increases and perks was quickly
reversed after a public outcry.