Commenting on the speech of His Excellency # Minister of Finance regarding reducing expenses and painful procedures, which is commendable transparency: First: All countries of the world will review their expenses and suffer economically, as they are a global and historical pandemic that is no longer hidden from anyone. * What I will say is analysis and forecasts, not information. I have been injured and I have erred and this is for briefing.
We talked at the beginning of the pandemic, which was confirmed by His Excellency the Minister that Saudi Arabia set the human being and its safety is the first criterion before the economy.
Owns # Saudi Arabia and thankfully capable financial pillar , God willing , to manage the financial crisis until the restoration of the national economy and the world recovers, which two years would require at least this is certainly what Atmlleke many countries in the world where the debt ratio is low and the deficit under control and great potential coverage continues.
The Saudi government has a wide area of expenses and expenditures that can be deferred, reduced spending on, or seized without the need to resort to reducing state employees ’salaries or stopping spending on social welfare programs, as some panickers wish.
His Excellency the Minister talked about a month ago from now on spending cuts due to the precautionary measures on many activities, including tourism, entertainment and staff assignments, which are cuts made due to the crisis, that is, they are saving and not non-exchange .. But today he talked about other measures in the event of a prolonged crisis, I will try to guess some of them in this " Porridge "
The government will not expose the purchasing power of citizens to great harm, which is important at this time to stimulate the movement of the economy and demand to reduce salaries or others, nor will it offer bank loans, whether real estate or consumer problems to faltering that may harm the Saudi banking system .. especially as it has many other options.
The government provided a package of support measures for the private sector by about 180 billion riyals, and the government supported the salaries of 1.2 million Saudi employees in companies, at a rate of no less than 60% of their salaries, so how can you return to reduce the salaries of government sector employees or prejudice spending on security and other social welfare programs !!! ? If not panic.
The economic reforms that Saudi Arabia implemented during the past four years in implementation of the 2030 vision will help it find new solutions to deal with this unprecedented crisis. For example, today there is a greater ability to borrow (bonds and bonds), there are tax revenues and there are returns of foreign and domestic investment and anti-corruption.
Finally, yes, there may be a need for some painful measures, and we all must prepare for it by promoting a culture of savings and re-arranging exchange priorities.
The first point that the Minister of Finance spoke about is postponing spending on some projects or in other words, extending the duration of their implementation. The Kingdom has a long list of these projects, some of which have budgets and funds in advance that can be resorted to now or stop spending on them. There are also huge items that can be reviewed, such as military spending.
The government may have to deal with employee allowances according to the nature of the work, and may have to stop all forms of assignments for a certain period, as it is possible to stop all posts in exhibitions, conferences, and unnecessary events, or reduce the number of participants in it and control administrative spending, bonuses, etc., which are already retracted due to the pandemic.
It is also possible to deal with the financial compensation for expatriates after the conditions of the companies are stabilized again or raise the added tax from 5% to 10% for example and for a specific period. Likewise, the selective tax on harmful goods (tobacco products, soft drinks and the like can be raised, so of course its "painful" repercussions on some but Necessary
Raising energy prices (gasoline and gas) can be a solution in the event that economic activity advances slightly and it is in line with the rise in oil prices globally and is carried out according to a specific mechanism that has become known to all..It is true that it will raise the cost to some a little but it is also necessary and we have to share with the government some pain.
Of course, all of these measures in a solution that will be applied for a period of one or two years only until the global economy recovers, God willing, which will according to the expectations of international institutions and research centers will not be before 2022 and also until the return of oil prices to appropriate levels and this may take some time.
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