First rain hits Dubai, unstable weather ahead

Riyadh, Jul 1: Saudis braced Wednesday for a tripling in value added tax, another unpopular austerity measure after the twin shocks of coronavirus and an oil price slump triggered the kingdom's worst economic decline in decades.

Retailers in the country reported a sharp uptick in sales this week of everything from gold and electronics to cars and building materials, as shoppers sought to stock up before VAT is raised to 15 percent.

The hike could stir public resentment as it weighs on household incomes, pushing up inflation and depressing consumer spending as the kingdom emerges from a three-month coronavirus lockdown.

"Cuts, cuts, cuts everywhere," a Saudi teacher in Riyadh told AFP, bemoaning vanishing subsidies as salaries remain stagnant.

"Air conditioner, television, electronic items," he said, rattling off a list of items he bought last week ahead of the VAT hike.

"I can't afford these things from Wednesday."

With its vast oil wealth funding the Arab world's biggest economy, the kingdom had for decades been able to fund massive spending with no taxes at all.

It only introduced VAT in 2018, as part of a push to reduce its dependence on crude revenues.

Then, seeking to shore up state finances battered by sliding oil prices and the coronavirus crisis, it announced in May that it would triple VAT and halt a cost-of-living monthly allowance to citizens.

The austerity push underscores how Saudi Arabia's once-lavish spending is becoming a thing of the past, with the erosion of the welfare system leaving a mostly young population to cope with reduced incomes and a lifestyle downgrade.

That could pile strain on a decades-old social contract whereby citizens were given generous subsidies and handouts in exchange for loyalty to the absolute monarchy.

The rising cost of living may prompt many to ask why state funds are being lavished on multi-billion-dollar projects and overseas assets, including the proposed purchase of English football club Newcastle United.

Shopping malls in the kingdom have drawn large crowds in recent days as retailers offered "pre-VAT sales" and discounts before the hike kicks in.

A gold shop in Riyadh told AFP it saw a 70 percent jump in sales in recent weeks, while a car dealership saw them tick up by 15 percent.

Once the new rate is in place, businesses are predicting depressed sales of everything from cars to cosmetics and home appliances.

Capital Economics forecast inflation will jump up to six percent year-on-year in July, from 1.1 percent in May, as a result.

"The government ended the country's lockdown (in June) and there are signs that economic activity has started to recover," Capital Economics said in a report.

"Nonetheless, we expect the recovery to be slow-going as fiscal austerity measures bite."

The kingdom also risks losing its edge against other Gulf states, including its principal ally the United Arab Emirates, which introduced VAT at the same time but has so far refrained from raising it beyond five percent.

"Saudi Arabia is taking massive risks with contractionary fiscal policies," said Tarek Fadlallah, chief executive officer of the Middle East unit of Nomura Asset Management.

But the kingdom has few choices as oil revenue declines.

Its finances have taken another blow as authorities massively scaled back this year's hajj pilgrimage, from 2.5 million pilgrims last year to around a thousand already inside the country, and suspended the lesser umrah because of coronavirus.

Together the rites rake in some $12 billion annually.

The International Monetary Fund warned the kingdom's GDP will shrink by 6.8 percent this year -- its worst performance since the 1980s oil glut.

The austerity drive would boost state coffers by 100 billion riyals ($26.6 billion), according to state media.

But the measures are unlikely to plug the kingdom's huge budget deficit.

The Saudi Jadwa Investment group forecasts the shortfall will rise to a record $112 billion this year.

Dubai, Apr 23: UAE announced on Thursday 4 deaths, 518 new coronavirus cases and 91 recoveries.

According to the Ministry of Health and Prevention, an additional 29,000 COVID-19 tests were performed, which revealed 518 new positive cases, bringing the total number of cases to 8,756. The new patients identified are in a stable condition and undergoing treatment, according to the ministry.

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An additional 29,000 Covid-19 tests were performed, which revealed 518 new cases bringing the total number of cases to 8756. The new cases identified are in a stable condition and undergoing treatment, @mohapuae announced today. #UAEGov

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@uaegov
Also, @mohapuae announced that four Asian expats who tested positive for COVID-19 died due to complications. This brings the total death toll to 56. The Ministry of Health and Prevention expressed sincere condolences to the families of the deceased.

The ministry announced that four Asian expats who tested positive for COVID-19 died due to complications. This brings the total deaths to 56. The ministry expressed sincere condolences to the families of the deceased.

The total number of recovered cases has reached 1,637 with 91 patients fully recovered on Thursday, after receiving treatment.

Dubai, May 21: Around 10,000 Iranian health workers have been infected with the new coronavirus, the semi-official ILNA news agency quoted a deputy health minister as saying on Thursday.

Health services are stretched thin in Iran, the Middle East country hardest hit by the respiratory pandemic, with 7,249 deaths and a total of 129,341 infections. The Health Ministry said in April that over 100 health workers had died of COVID-19.

No more details on infections among health workers were immediately available.

Earlier on Thursday, Health Minister Saeed Namaki appealed to Iranians to avoid travelling during the Eid al-Fitr religious holiday later this month to avoid the risk of a new surge of coronavirus infections, state TV reported.

Iranians often travel to different cities around the country to mark the end of the Muslim holy fasting month of Ramadan, something Namaki said could lead to a disregard of social distancing rules and a fresh outbreak of COVID-19.

"I am urging you not to travel during the Eid. Definitely, such trips mean new cases of infection...People should not travel to and from those high-risk red areas," Namaki was quoted by state television as saying.

"Some 90% of the population in many areas has not yet contracted the disease. In the case of a new outbreak, it will be very difficult for me and my colleagues to control it."

A report by parliament's research centre suggested that the actual tally of infections and deaths in Iran might be almost twice that announced by the health ministry.

However, worried that measures to limit public activities could wreck an economy which has already been battered by U.S. sanctions, the government has been easing most restrictions on normal life in late April.

Infected cases have been on a rising trajectory for the past two weeks. However, President Hassan Rouhani said on Wednesday that Iran was close to curbing the outbreak.