Coronavirus has been affecting the world immensely from health to social life and to the economy. Therefore, the states are finding other ways to earn money and run their economy because no one is mightier than money, at least right now in this world, after all. That’s the reason why the Kingdom of Saudi Arabia has decided to increase the Value-add-tax in the coming months that would make Ummrah and Hajj more expensive and costly according to economists and experts who commented on the new development.
According to Saudi Finance Minister Mohammed al-Jadaan and SPA news agency, KSA government has been planning to raise the VAT by 5 to 15 percent in July to stabilize its economy. They have been planning and might reduce the allowances to accommodation to zero percent due to the depreciating economy of the country due to the pandemic.
The minister said that the pandemic has resulted in a decrement in the price of oil and increment in the expenses, therefore, they are forced to take some steps to reduce the effect.
Anadolu Agency was the first news agency to report it. Mohamed Ibrahim, the economist of Turkey, told the agency that the economy of KSA has faced a great shock due to the plunging price of crude oil globally, therefore, the authorities are now finding ways to reduce the negative impacts of the outbreak on the finances.
The economist further explained that the economy of the country depends on crude oil mostly, therefore, the deficit has been increased when the price of it reduced to minus for the first in history. Mr. Ibrahim told the news agency that the deficit increased to $9.1 billion in the first quarter of the current year in KSA.
According to facts and figures, Saudi Arabia earns around $12 billion every year from religious visits that contribute 7 percent in the GDP of the country and 20 percent to the non-oil GDP rate.
Riyadh has been busy finding ways and steps to minimize the negative effect of the outbreak on the economy. Currently, there are 39,048 confirmed cases of COVID-19 in KSA, and death tally has stood at 246, according to John Hopkins Coronavirus Resource Center.