Saudi Arabia extends Covid salary aid programme in reduced form

Saudi Arabia extended by three months a stimulus programme to help businesses still struggling to recover from the effects of Covid-19 but rolled back its scope, in a first test of how the economy will respond as support measures introduced at the height of the pandemic wind down.

The initiative, which was due to expire in October, will now continue until January and will support half of all Saudis working in an organisation still affected by coronavirus, sectors including travel, sports and entertainment, the General Organization for Social Insurance (GOSI) said in a statement on Tuesday.

The programme originally covered 70 per cent of Saudi employees in firms with over five workers, and applied to a wider swath of activities across the private sector.

While the extension will be welcome news for Saudi businesses struggling to make ends meet during a double crisis caused by the coronavirus and oil market turmoil, the new restrictions could cut off employees and firms from support at a time when any recovery is still fragile.

GOSI’s Twitter post on the announcement was inundated with replies from Saudis asking whether they would still be covered.

In addition to the effects of the lockdown, many businesses are adjusting to new austerity measures like higher customs fees and a tripling of value-added tax. Losing the salary support could put them under further pressure.