Blow of higher utility bills softened for low-income Saudis

December 24, 2016

Jeddah, Dec 24: Saudi Arabia spends billions on subsidies — so economists were hardly suprised when Thursday’s budget confirmed plans to raise energy and water prices to be more in line with market rates.

family

But what was an innovative move was the accompanying “Household Allowance” scheme, which is designed to soften the blow of the rate increases for some of the Kingdom’s most needy residents.

The Kingdom’s subsidies, or “energy benefits”, reached close to SAR 300 billion in 2015, when energy and water accounted for about 80 percent of the overall subsidies, the government’s “Fiscal Balance Program – Balanced Budget 2020” document shows.

But such subsidies disproportionately benefit richer Saudi residents: Lower income households — estimated to account for about 40 percent of the population — only benefit from around 30 percent of energy subsidies, the document shows.

Subsidy cuts

In line with moves made by other Arabian Gulf states, Saudi Arabia has been reducing subsidies, a move it terms “energy and water price reform”.

The first phase of this, which was introduced in 2016, included a “marginal” correction to energy and water prices, with very limited impact on low-income households. That phase produced savings of between SR27-29 billion, as well as reducing the growth rate in energy consumption, the Fiscal Balance Program states.

But the Kingdom plans a future phase of subsidy cuts, between 2017 and 2020, as part of its aim to eliminate its budget deficit during that time.

Domestic prices of energy and water products will be linked to the export price of the respective product, and this will fluctuate according to the international market. The prices of those products will be revised periodically, while the linkage of gasoline and diesel to reference prices is currently being studied, and will be implemented between 2017 and 2020.

The combined energy and water price reforms are expected to lead to saving of SR 209 billion per year by 2020, the Fiscal Balance Program states.

But this “phased increase in prices towards international market prices” will make it necessary to compensate low-income consumers.

Household Allowance

Indeed, the planned reforms between 2017-2020 “will significantly impact vulnerable household segments of the society, directly and indirectly”, according to the Fiscal Balance Program.

But it has a plan to soften the blow and in some cases boost the finances of low-income Saudis. The planned national Household Allowance aims to protect low- and medium-income households against the direct and indirect impact of the planned reforms.

Not only will this scheme compensate such households for the steeper costs of energy and water, it will also reward sensible energy consumption, the Fiscal Balance Program states.

“Instead of benefits that are built-in discounted prices of energy products, we will introduce bank transfers to the eligible households that will allow us to better redistribute benefits to the deserving households,” it stated.

“Today most of the vulnerable Saudi household segments are modest consumers. The allowance will cover the costs of sensible consumption, but those who currently consume more than these levels will need to moderate their consumption in order to limit the impact on their disposable income.”

Who can claim?

The principles of this cash allowance scheme have been based on “global success stories”, which suggest cash and bank transfers are the most efficient ways to target eligible recipients, and provide savings opportunities to households if they consume and spend wisely.

The first payment should be made before changing energy prices, according to the global best practices, to ensure that Saudi households can plan their expenditure ahead of price changes and feel relieved. And the amount should vary based on the number of people in a household and their income level.

The Household Allowance plan is open to mainly Saudi national households made up of first degree relatives. “The main beneficiaries of this program include Saudi households along with other segments, such singles who are living independently of their families, the non-Saudi household with a Saudi mother, and holders of a transit permit,” the Fiscal Balance Program states.

The value of the allowance is based on energy and water prices as well as other basic goods, to account for any indirect price rises.

The larger the size of the household, the greater the basic entitlement. In addition, the entitlement amount will be reduced for households with higher income levels — and those on the highest incomes will not have any entitlement at all.

The Ministry of Labor and Social Development responded to Saudi citizens’ many inquiries on social media over the unified “Citizens’ Account Program”, of which the Household Allowance scheme will be part. This will develop to become a comprehensive program that includes all different types of programs and government benefits.

These unified citizen accounts are for groups including Saudi families, unmarried individuals, Saudi mothers married to non-Saudis, and holders of free-movement cards, those that live near borders and have free movement between neighboring countries such as Yemen.

The ministry said on Twitter that the monthly income of the families will be the key factor to be considered. It called on Saudi citizens to shun listening to rumors and take news from credible sources such as the ministry’s call center.

How much will recipients get?

The Fiscal Balance Program gave an illustration on how the allowance could impact a household of six people in 2017, based on five income brackets.

The example showed that a household with an average income of SR4,500 a month would have an extra financial burden of SR450 a month due to higher energy and water prices. But they could receive an average allowance of SR700, leaving them SR250 a month better off.

But a household of six with an average income of SR34,500 a month would have an extra financial burden of SR1,100 a month, and not be entitled to an allowance.

“We will be spending generously, to ensure that we appropriately cover eligible Saudi households,” the Fiscal Balance Program documents state.

“The amount of Household Allowance will increase each year from 2017-2020 with the annual increase in burden on households resulting from gradual reforms. It is expected that the total annual amount of allowances will reach SAR60-70bn in 2020.”

On 1 Feb. 2017, a registration portal will be opened for the scheme, while all eligible social security recipients relevant to the Ministry of Labor and Social Development will be automatically registered.

All eligible beneficiaries will receive their first payment prior to implementing the new price changes, according to the Fiscal Balance Program.

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News Network
February 28,2020

Riyadh, Feb 28: Saudi Arabia on Thursday (Feb 27) suspended visas for visits to Islam's holiest sites for the "umrah" pilgrimage, an unprecedented move triggered by coronavirus fears that raises questions over the annual hajj.

The kingdom, which hosts millions of pilgrims every year in the cities of Mecca and Medina, also suspended visas for tourists from countries with reported infections as fears of a pandemic deepen.

Saudi Arabia, which so far has reported no cases of the virus but has expressed alarm over its spread in neighbouring countries, said the suspensions were temporary. It provided no timeframe for when they will be lifted.

"The kingdom's government has decided to take the following precautions: suspending entry to the kingdom for the purpose of umrah and visit to the Prophet's mosque temporarily," the foreign ministry said in a statement.

"Suspending entry into the kingdom with tourist visas for those coming from countries, in which the spread of the new coronavirus (COVID-19) is a danger."

The move comes as Gulf countries implement a raft of measures, including flight suspensions and school closures, to curb the spread of the disease from people returning from pilgrimages to Iran.

Even as the number of fresh coronavirus cases declines at the epicentre of the disease in China, there has been a sudden increase across the Middle East.

Since its outbreak, the United Arab Emirates has reported 13 coronavirus cases, Kuwait has recorded 43, Bahrain has 33 and Oman is at four cases.

Iran has emerged as a major hotspot in the region, with 19 fatalities from 139 infections - the highest death toll outside China, where COVID-19 originated.

While no cases have been reported in Saudi Arabia, one citizen is reported to be infected in Kuwait along with four Saudi women in Bahrain - all of whom had returned from Iran.

'UNPRECEDENTED' MOVE

The umrah, which refers to the Islamic pilgrimage to Mecca that can be undertaken at any time of year, attracts millions of devout Muslims from all over the globe each year.

There was no clarity over how the move would affect the annual hajj pilgrimage due to start in late July.

Some 2.5 million faithful travelled to Saudi Arabia from across the world to take part in last year's hajj - one of the five pillars of Islam.

The event is a key rite of passage for Muslims and a massive logistical challenge for Saudi authorities, with colossal crowds cramming into relatively small holy sites.

"This move by Saudi Arabia is unprecedented," Ghanem Nuseibeh, founder of London-based risk consultancy Cornerstone Global Associates, told news agency.

"The concern for Saudi authorities would be Ramadan, which starts at the end of April, and hajj afterwards, should the coronavirus become a pandemic."

The holy fasting month of Ramadan is considered a favourable period by Muslim pilgrims to perform the umrah.

Saudi Arabia's custodianship of Mecca and Medina - Islam's two holiest sites - is seen as the kingdom's most powerful source of political legitimacy.

But a series of deadly disasters over the years has prompted criticism of the Sunni kingdom's management of the pilgrimage.

In September 2015, a stampede killed up to 2,300 worshippers - including hundreds of Iranians - in the worst disaster ever to strike the pilgrimage.

The pilgrimage forms a crucial source of revenue for the government, which hopes to welcome 30 million pilgrims annually to the kingdom by 2030.

De facto ruler Crown Prince Mohammed bin Salman's Vision 2030 reform plan seeks to shift the economy of Saudi Arabia - the world's top crude exporter - away from oil dependency towards other sources of revenue, including religious tourism.

Comments

Whether this virus is also created by Allah the powerful? If yes then Muslims need not fear, they should continue to go the Mecca, on the Non-muslims should fear because allah hates them. &

 

And if the Virus not created by Allah, then Who created it?  Is there anyone else other than Allah?

 

You Fool Go-vind...there is no logic in your statement.

will you touch burning fire for 2 min if you are fearless...foolish right

 

GOD is not magic...its logical

 

God never helped any Human beigh with magic to conver to his religion,

he would have done then all will be worshipping him alone..

 

this is test for all human being

 

he created all human beign and he loves every human being but he loves only those who good to another human.

 

screem how ever you want..but muslim population will increase 100%.

please check your health before cursing other.

 

So-called powerfull GOD saved all human beign when they sincierly prayed also you.

 

the more you hate ISLAM the more it become powerful.

 

HINUD is not religion but it is geographical name

RAM is not god but he is king of ayodya same human beign

Phophet Mohammed Pbuh is not GOD but he is messanger of GOD

Veda says na thasya parathima asti- there is no image of GOD but you make some photo and worship.

the biggest sin in front of GOD which will never be forgiven is  worshipping Idol.

God is one not multi...if god is mutli then there is no meaning in justics

 

Love human being automatically God loves you

 

 

Govind
 - 
Friday, 6 Mar 2020

Fools.. Why they fear virus. If somebody ask them, they say we have fear only on Allah. They should go there.. they should be infected and population should decease. Let their so-called powerful god save them

Logical Indian
 - 
Friday, 6 Mar 2020

Muslims fear only Allah and no body else. then why this fear for the virus. They should trust allah fully and allow pilgirms. "Allah o akbar"

Abdul Rahman
 - 
Friday, 28 Feb 2020

Mecca to b spelled Makkah.

Makkah is the correct spelling

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News Network
May 5,2020

Abu Dhabi, May 5: The overall real GDP (gross domestic product) of the United Arab Emirates is estimated to have grown by 1.7 percent in 2019, the country’s central bank said in a statement on Monday carried by WAM.

"The UAE hydrocarbon sector is estimated to have exhibited a growth of 3.4 percent in 2019. However, non-oil activities advanced at a softer pace growing by 1.0 percent. As a result, overall real GDP is estimated by FCSA (Federal Competitiveness and Statistics Authority) to have grown by 1.7 percent in 2019," said the financial regulator in its Annual Report 2019.

"The spread of COVID-19 is expected to impact trade and supply chain movements, coupled with travel restrictions which paves way for high volatility in capital markets and commodity prices. While the outbreak is expected to negatively affect the global and domestic economies, it is still early to gauge the scale of the economic fallout," the report added.

The report noted that the higher hydrocarbon output, as well as growth in non-hydrocarbon economic activity, supported the pace of the country's overall economic growth in 2019.

"Meanwhile, the fading effect of VAT, the appreciating Dirham, lower energy prices and decline in rents pushed inflation in negative territory. However, the employment rate registered a steady rebound. Looking ahead, the economic outlook for 2020 remains uncertain owing to the COVID-19 outbreak," the report elaborated.

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News Network
January 8,2020

Dubai, Jan 8: Iranian state television said on Wednesday that at least 80 "American terrorists" were killed in attacks involving 15 missiles Tehran launched on US targets in Iraq, adding that none of the missiles were intercepted.

State TV, citing a senior Revolutionary Guards source, also said Iran had 100 other targets in the region in its sights if Washington took any retaliatory measures. It also said US helicopters and military equipment were "severely damaged".

Iran launched missile attacks on US-led forces in Iraq in the early hours of Wednesday in retaliation for the US drone strike on an Iranian commander whose killing has raised fears of a wider war in the Middle East.

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