Saudi 2016 budget to bring bad news for expats

Published:  22 Dec at 6 PM
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Tagged: Australia
Saudi Arabia’s annual budget statement is expected to announce new fees for expat professionals working in the kingdom.

The Saudi budget is expected to contain a number of tough measures aimed at putting the Kingdom in recovery mode and achieving a financial balance over the next three years. The Saudi economy has taken a hard hit from falling oil prices, resulting in financial instability, project cancellations and delayed payment to major Saudi companies.

The budget is expected to detail rationalised spending targets, cuts in subsidies and new fees to be levied from expatriate workers as well as price increases due to cuts in electricity and water subsidies. Some Saudi media are reporting a 40 per cent increase in fuel prices is also on the cards. According to Arab News, the levy on expat workers is expected to be a fixed charge of SR800 ($213) per month, although only unconfirmed reports are available to date.

Low-income Saudi nationals can expect a refund of utility price increases in the form of a government-led cash aid plan, also to be used to reward nationals who use energy efficiently. Some economists are concerned over the possible effects of imposing a monthly fee on expat workers, in that the measure may discourage business and investment as well as making working in the Kingdom less attractive for expat professionals.

According to Gulf Research Center economic research director John Sfakianakis, only time will tell whether or not the new fee proves economically viable. Other economists believe cutting subsidies should be regarded as a positive move, as the majority go to corporations rather than to households and individuals. Factories and businesses, they point out, have been enjoying cheap water and oil for a long time, resulting in high energy-intensive activities. Cutting subsidies would encourage the use of cleaner energy sources, but the backlash would be increased transportation costs and inflation.
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