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Tue 12 May 2020 02:00 PM

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Saudi Arabia said to cut $7.9bn from mega-projects and 'vision progammes'

Saudi Arabia has taken a number of austerity measures to soften the blow of the Covid-19 pandemic

Saudi Arabia said to cut $7.9bn from mega-projects and 'vision progammes'

Saudi Arabia’s government has decided to cut SAR 30 billion ($7.9bn) from the budget of the kingdom’s various Vision Realisation Programs (VPRS) and other mega-projects, according to local media reports.

Citing “well-informed sources”, Saudi Gazette reported that the plan forms part of a large strategy to cut SAR 100 billion ($26.6bn) to soften the blow of the Covid-19 pandemic.

The sources added that despite the reduction in budgets, work and planned timelines will continue without interruption.

The Saudi Gazette report added that SAR 177 billion has been allocated to help bolster the health sector, and to help reduce the impact on the private sector.

Earlier this week, the Saudi government announced aid the kingdom will triple its value added tax (VAT) and halt monthly handout payments to citizens in new austerity measures amid record low oil prices and a coronavirus-led economic slump.

The measures, which could stir public resentment with the cost of living rising, come as the petro-state steps up emergency plans to slash government spending to deal with the twin economic blow.

According to Moody’s Investors Services, “the new fiscal austerity package….will help offset a portion of this year’s revenue loss caused by the sharp decline in oil prices and lower oil production.”

In the near-term, Moody’s said that that VAT hike will likely “dampen consumption substantially, adding to the negative impact of the fall in oil prices and measures taken to contain the epidemic.”

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