Claims that a huge outflow of foreign remittances from Saudi Arabia could negatively impact the national economy are grossly exaggerated, according to an expert quoted in Saudi media.
Talat Hafez, secretary-general of the Information and Banking Awareness Committee for Saudi Banks, said the volume of remittances is not a cause for concern as the budget surplus is linked to the country’s general revenues and corresponding public spending levels, Arab News reported.
The World Bank in December ranked the kingdom the world’s second largest remittance source country after the US, with outflows estimated at $37 billion in 2014.
It has prompted alarm in the kingdom as the government seeks to plug a budget deficit amid persistently low oil prices.
This week it was reported that authorities want to control the flow of money out of Saudi Arabia and are devising new regulations to cap the level of remittances permitted to be sent abroad by foreign workers in line with their incomes.
The government has also proposed a controversial 6 percent tax on remittances.
Hafez noted that the volume of foreign remittances is estimated at almost 6 percent of Saudi Arabia’s GDP, and agreed that if the kingdom is able to reduce the flow of these funds out of the country, this will help boost the national economy.
However, he said that fears that the high volume of remittances could cause further deficit were inflated.
He also said that it was not surprising that Saudi Arabia has the second highest remittances in the world, as the country is in a “phase of development and prosperity in all areas and thus needs to recruit a large number of foreign workers to benefit from their expertise”.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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