Saudi makes first $533m payment to social support scheme

Saudi Arabia has made the first payments under its social support programme to protect citizens from austerity measures.

The kingdom announced the ‘citizen account’ scheme last year and registration began in February but it has delayed the first payments until a number of reforms are coming into affect including a 5 per cent value added tax rate and increases to fuel and electricity prices.

In an announcement, minister of labour and social development Ali bin Nasser Al-Ghafais said the government had deposited a total of SAR2bn ($533.3m) in bank accounts.

Around 50 per cent of families that applied for the scheme will receive the maximum payment of SAR938 ($250). The minimum rate is SAR350 ($93) but the kingdom has promised to review payouts every quarter based on cost increases.

Payments were made to three million families, accounting for 10.6 million individuals in total, based on household income, the number of dependents and their age.

The second instalment of the programme will be paid on January 10 to all beneficiaries who completed applications before December 16.

Following this, each payment will be on the 10th of each calendar month unless it is a Friday or Saturday, in which case the payment will be made one day earlier or later.

Beneficiaries have to be citizens of Saudi Arabia or the son, daughter or spouse of a citizen permanently residing in the country.

Registration for the programme began in February and around 80 per cent of Saudi families had applied by the end of April.

Read: 80% of Saudi families register for social assistance scheme

Last week, the kingdom said it would increase the prices of electricity, car and aviation fuel and diesel gradually from the first quarter of next year.

Read: Saudi to increase electricity, fuel prices in Q1

However, the pace of price increases to reach international benchmarks is now slower than previously envisioned. Under the 2018 budget plan most commodities and services will only reach 90 per cent of benchmarks by 2020 from the 100 per cent outlined previously.

Read: Saudi Arabia slows phasing out of energy subsidies

The kingdom said it would pay for the social support programme in part through the price increases.