Saudi Arabia’s Vision 2030 project is being cut by 30 billion riyals ($8 billion) as part of austerity measures introduced in light of an economic slump caused by low oil prices and the coronavirus pandemic.
According to the Okaz newspaper (via Middle East Eye), a collapse in the price of oil has resulted in cuts to expenditure on mega-projects and giga-projects in Saudi Arabia.
Vision 2030 is still going ahead, but with a reduction in the budget, said Okaz. The publication added that the salaries of state employees will not be affected by the cuts.
The news comes after Minister of Finance Mohammed al-Jadaan unveiled a 100 billion riyal ($27 billion) austerity programme on Monday (May 11).
Austerity programme introduced in Saudi Arabia
The measures were announced as a way to combat the economic downturn caused by low oil prices and the coronavirus pandemic.
In a statement released by the Saudi Press Agency, Jadaan said: “It has been decided that the cost of living allowance will be halted from June 2020 and VAT will be raised from 5 percent to 15 percent from 1 July.”
Saudi Aramco, the state oil company, posted a 25 percent drop in profits for Q1 2020 on Tuesday (May 12). It also said the COVID-19 crisis will put pressure on demand across the next year.
“The COVID-19 crisis is unlike anything the world has experienced in recent history and we are adapting to a highly complex and rapidly changing business environment,” CEO Amin Nasser said in a statement, according to AFP.
Giga-project expenditure cut over low oil prices
Saudi Arabia is creating a host of attractions as part of Vision 2030, which aims to diversify the economy in order to reduce the country’s reliance on oil.