By Staff writer
Deputy Crown Prince Mohammed promises cash handouts to low and middle-income Saudis
Saudi Arabia has moved to assure low and middle-income Saudis that the impact of subsidy cuts would be limited for them.
"We don’t want to change the life of the average Saudi,” Deputy Crown Prince Mohammed bin Salman reportedly said.
“We want to exert pressure on wealthy people, those who use resources extensively.”
The comments, to Bloomberg, come as the kingdom is preparing the biggest overhaul of its oil-reliant economy in decades to help pare back its forecast deficit of $87bn in 2016.
Prince Mohammed has said low and middle-income families would be given cash handouts to cover the increased costs of items such as gas, electricity and water as the kingdom gradually raises fees closer to market value.
Saudi Arabia has already raised prices for such commodities. Combined with further planned cuts, the subsidy restructuring is expected to generate $30bn a year by 2020.
Prince Mohammed said the subsidy restructure may also help reduce consumption, with citizens free to use the cash handouts to cover the cost of utilities or for other expenses.
"Let’s say the international price for electricity is 1,000 riyals and you only pay 50, we will give you the 1,000 riyals and increase the price of electricity," he was quoted as saying. "You will have two options: You either spend the 1,000 on electricity bills like you used to, or you can lower your electricity consumption and use it on something else."