Bloomberg: The Saudi economic downturn is the highest in 30 years

Bloomberg agency confirmed that the contraction of the Saudi economy is the highest in 30 years, and one of its main reasons is the decrease in the income of citizens, compared to the rise in the cost of living in the Kingdom.

“Saudi Arabia has removed two million people from an assistance program meant to soften the blow of its economic overhaul, stirring frustration among some during the worst downturn in decades.

“Officials began to scale back the so-called “Citizen’s Account” program in April, when they suspended new applications, set an upper limit for payouts and tweaked eligibility rules. The number of beneficiaries began to fall and the drop has accelerated. In July alone, 1.3 million people lost payments.

“That hardship will test support for a critical tool unveiled by Crown Prince Mohammed bin Salman in 2016. And it will also likely hurt consumption as the economy shrinks and many Saudis face higher costs and lower income.

“Designed to take the edge off a transformation plan that’s included subsidy cuts and a new value-added tax, the Citizen’s Account had provided monthly payments to more than 12 million people — over half of all Saudis — targeting low and middle-income households.

“The International Monetary Fund expects the kingdom’s gross domestic product to contract 6.8% in 2020, the most in over 30 years. Facing lower oil revenue, officials have tripled VAT, increased import fees and canceled a cost-of-living allowance for government workers.

“There are some individuals registered as independent that don’t fulfill the standards to receive support because they live with their families,” the statement said. “Eligibility conditions didn’t change — but some regulations were approved before the coronavirus crisis, with the goal of directing support to categories that are more deserving.

“Beneficiaries were asked to show a rental contract or property deed to prove they live independently — disqualifying 1.3 million people in a culture where adults often stay with their families until marriage. The program said those found ineligible can register as dependents of their household head.

“The program’s customer-service Twitter page is full of complaints about halted payments or questions about when applications will reopen.”