Saudi Arabia extends some stimulus measures for business

Saudi Arabia is extending some private sector stimulus measures that would have expired this month, with the government saying it’s keen to support businesses that are struggling to recover from the effects of the coronavirus pandemic.

Among the initiatives extended is a pledge to cover 60 per cent of some Saudi salaries in the private sector through a government unemployment insurance programme called Saned.

The announcement came the day after the kingdom implemented a tripling of its value added tax to 15 per cent, a measure that many economists expect to hurt businesses and consumption.

Facing a double crisis from the pandemic and oil market turmoil, the economy of the world’s biggest crude exporter is expected to contract 6.8 per cent overall this year, the most in over three decades, according to the International Monetary Fund.

The fund forecasts a return to 3.1 per cent growth in 2021.

Saudi officials prolonged the stimulus programmes in order to “reduce the financial and economic effects of the coronavirus pandemic on individuals, investors and private sector institutions,” according to a statement published by the official Saudi Press Agency.

Other measures extended include a halt to fines for recruiting foreign workers; the permission to delay paying customs fees on imports for 30 days, in exchange for a bank guarantee; and an order to speed up paying VAT refund requests.

It wasn’t immediately clear how long some of the initiatives will be extended for, with the statement saying it would be for “an additional period.”