No one had expected before that the world’s biggest crude exporter would receive strict directions from the International Monetary Fund due to Crown Prince Mohammed bin Salman’s (MBS) failed economic policies.
Saudi Arabia should resume letting energy prices rise as part of efforts to reduce consumption and help hit reduction targets for emissions, according to the International Monetary Fund.
In addition to the sizable diesel price increase implemented already in 2023, the mission recommends going further by lifting the cap on gasoline prices and adjusting the current formula to allow faster increases for electricity and other fuel prices.
“Non-oil revenue collection should continue to be prioritized. Tax reforms should build on strong efforts made to close the tax gap with the G20 average, including through a broader reform that at least maintains the VAT rate at 15% and rationalizes tax expenditures. Such reforms should be accompanied by strengthened tax administration.”
“Main priorities are to continue rationalizing the public sector wage bill, including through ongoing strategic workforce planning and review, greater efficiency in public investment, including through the ongoing work of the Spending Efficiency and Governmental Projects Authority, and full utilization of the expenditure chain (ETIMAD).”
In light of these difficult economic conditions, MBS continues to spend huge amounts of money on unreal projects, including NEOM and The Line.
The cost of living in Saudi Arabia is usually lower than in the West. Furthermore, salaries are high, and there is no personal income tax.
However, things have significantly changed in recent years. Saudi citizens have complained over the past two years of the failed policies adopted by a prince who is leading a sweeping crackdown on corruption and self-enrichment by the Saudi elite and preaching fiscal austerity at home.
In light of these difficult economic conditions, MBS continues to spend huge amounts of money on unreal projects, including NEOM and The Line.
The cost of living in Saudi Arabia is usually lower than in the west. Furthermore, salaries are high and there is no personal income tax.
However, things have significantly changed in recent years. Saudi citizens have complained over the past two years of the failed policies adopted by a prince who is leading a sweeping crackdown on corruption and self-enrichment by the Saudi elite and preaching fiscal austerity at home.
Bruce Riedel, a former Middle East analyst at the Central Intelligence Agency, disagreed with MBS’s reform package, saying that it will not reduce its dependence on oil income in the short term.
The Saudi ongoing economic crisis will have devastating effects on infrastructure companies, especially on labor market.
Saudi Arabia suffers from weak GDP growth despite the raising fees and taxes. The government is unable to pay the salaries of foreign workers, leaving thousands of workers from Southeast Asia before an unknown future.
