Since the outbreak of the coronavirus pandemic, Saudi Arabia was one of the few countries in the world that maintained its strength of services, including healthcare, and its citizens’ jobs, experts said Wednesday.
“The Kingdom achieved advanced results compared to other countries in maintaining the citizens’ jobs in both public and private sectors, and the strength of its services, in healthcare and other fields,” Khalid Alsweilem, economics and finance scholar, said during a webinar to discuss the economic impact of coronavirus.
But Saudi Arabia can no longer base its financial and economic policies only on oil.
“You cannot trust the current prices because it doesn’t mean they will remain the same. We can’t base our future … on oil prices after what we just saw,” Abdullah Alrebdi, board member of Saudi Financial Association (SAFA), said.
Alrebdi was referring to the oil price war earlier this year after Russia walked away from a deal with OPEC and nine other oil exporters to curtail supplies.
In May, the Saudi government announced that it would raise value-added tax (VAT) from 5 percent to 15 percent starting from July 1.
Asked why the government does not lower the VAT again following the stabling of oil prices, Alrebdi said this was a long-term plan. “The government is looking at 2021, 2022 and 2023 … and how to fund public salaries, maintenance and other services,” he said, adding that the VAT was “part of the solution, but not the solution.”
The Communication and Financial Knowledge Center holds on Wednesday a Webinar to discuss the local & global economic impact of Covid-19 pic.twitter.com/FRA5yQvzEz— مركز التواصل والمعرفة المالية (@CFKC_KSA) June 29, 2020
He also noted that the government would be looking at more privatization in some sectors. “One this is done, the government’s bill will be reduced, and then we can talk about reducing taxes,” Alrebdi said.
Meanwhile, Mohammed Albishi, an economic journalist, praised Vision 2030. Albishi said that it contributed to the launch of sovereign funds, “which took opportunities and generated revenues for the state away from oil.”
Sovereign funds are something Alsweilem said allowed Asian countries, such as China, South Korea and Singapore, to grow and become among the more robust economies in the world. “The Kingdom appears to be on that same path with Vision 2030,” he said.