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Abu Dhabi, UAEFriday 21 September 2018

Saudi Arabia launches cash credit programme for low and middle-income citizens 

It comes as the kingdom gradually raises domestic energy prices under a plan to repair public finances and reduce the economy’s reliance on oil

Saudi Arabia PMI dips in March as VAT dampens demand.  Tasneem Alsultan / Bloomberg
Saudi Arabia PMI dips in March as VAT dampens demand. Tasneem Alsultan / Bloomberg

The government of Saudi Arabia announced on Tuesday the launch of a cash transfer programme aimed at low and middle-income citizens.

The so-called "Citizen's Account" programme will make monthly cash payments to eligible Saudi households as it gradually raises domestic energy prices under a plan to repair public finances and reduce the economy’s reliance on oil.

The payments will begin on December 21, before the next surge in energy prices, authorities have said.

The Saudi cabinet said the programme was designed to compensate low and middle-income families hurt by austerity measures being introduced by the kingdom, which also include petrol price adjustments, electricity tariff adjustments, and value added tax (VAT) on all food and beverage items.

The Citizen's Account programme was first announced by the government in December last year, with registration for Saudi citizens opening in February.

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Saudi ministers approved the so-called Citizen’s Account programme, which will be reviewed quarterly, as they ratified a gradual increase in the prices of energy and electricity products, which will start on January 1.

The government is trying to offset the impact on family incomes as it implements an economic overhaul triggered by the sharp drop in oil revenues in 2014. To avoid a rundown on savings, authorities cancelled projects deemed unnecessary, cut costly subsidies and plan to introduce a value-added tax.

Allowances will be paid to eligible families before the implementation of any economic reforms. The criteria specifies that beneficiaries must be citizens of the kingdom of Saudi Arabia and must permanently reside in the country.

Eligible beneficiaries are Saudi families, individuals living independently, beneficiaries of social security and Saudi mothers married to foreigners. The government has highlighted that payments will differ depending on the size and income of each family.

The scheme is considered to be vital in advancing the economic transformation of Saudi Arabia’s "Vision 2030".

Saudi Crown Prince Mohammed bin Salman is leading efforts to reduce the kingdom's dependency on oil, including raising non-oil revenue and selling stakes in state-owned companies, including Saudi Aramco.

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