Sudan | 8 killed in agitation over bread, fuel price hike

May 11: Saudi Arabia will triple its value-added tax rate and suspend a cost of living allowance for state workers, it said on Monday, seeking to shield finances hit by low oil prices and a slump in demand for its lifeline export worsened by the new coronavirus.

Historic oil output cuts agreed by Riyadh and other major producers have given only limited support to prices after they sank on oversupply caused by a war for petroleum market share between the kingdom and its fellow oil titan Russia.

Saudi Arabia, the world's largest oil exporter, is also being hit hard by measures to fight the new coronavirus, which are likely to curb the pace and scale of economic reforms launched by Crown Prince Mohammed bin Salman.

"The cost of living allowance will be suspended as of June 1, and the value added tax will be increased to 15% from 5% as of July 1," Finance Minister Mohammed al-Jadaan said in a statement reported by the state news agency. "These measures are painful but necessary to maintain financial and economic stability over the medium to long term...and to overcome the unprecedented coronavirus crisis with the least damage possible."

The austerity measures come after the kingdom posted a $9 billion budget deficit in the first quarter.

The minister said non-oil revenues were affected by the suspension and decline in economic activity, while spending had risen due to unplanned strains on the healthcare sector and the initiatives taken to support the economy.

"All these challenges have cut state revenues, pressured public finances to a level that is hard to deal with going forward without affecting the overall economy in the medium to long term, which requires more spending cuts and measures to support non-oil revenues stability," he added.

The government has cancelled and put on hold some operating and capital expenditures for some government agencies, and cut allocations for some reform initiatives and projects worth a total 100 billion riyals ($26.6 billion), the statement said.

Central bank foreign reserves fell in March at their fastest rate in at least 20 years and to their lowest since 2011, while oil revenues in the first three months of the year fell 24% from a year earlier to $34 billion, pulling total revenues down 22%.

"The reforms are positive from a fiscal side as greater adjustment is essential. However, the tripling of VAT is unlikely to help that much in 2020 revenue wise with the expected fall in consumption," said Monica Malik, chief economist at Abu Dhabi Commercial Bank.

She said she kept unchanged her deficit forecast of 16.3% of GDP for this year, which already factors in a greater than previously announced spending cut.

About 1.5 million Saudis are employed in the government sector, according to official figures released in December.

In 2018, Saudi Arabia's King Salman ordered a monthly payment of 1,000 riyals ($267) to every state employee to compensate them for the rising living costs after the government hiked domestic gas prices and introduced value-added tax.

DIFFICULT TIMES

A committee has been formed to study all financial benefits paid to public sector employees and contractors, and will submit recommendations within 30 days, the statement said.

In late 2015, when oil prices fell from record highs, the kingdom slashed lavish bonuses, overtime payments and other benefits once considered routine perks in the public sector.

In a country without elections and with political legitimacy resting partly on distribution of oil revenue, the ability of citizens to adapt to such reforms is crucial for stability.

"Tripling the VAT will test the limits of the balance between revenues and consumption as the economy dives into a deep recession. The move will impact consumption and could also lower the expected revenues," said John Sfakianakis, a Gulf expert at the University of Cambridge.

"These are pro-austerity and pro-revenue moves rather than pro-growth ones," he said.

Hasnain Malik, head of equity strategy at Tellimer, said the VAT rise could bring about $24-$26.5 billion in additional non-oil fiscal revenue. The rise would hit consumer spending further but was a needed step towards fiscal sustainability, he said.

Islamabad, May 25: Pakistan’s coronavirus cases on Monday reached 56,349 with 1,748 new patients while the death toll climbed to 1,167, the health ministry said.

The Ministry of National Health Services reported that 22,491 cases were diagnosed in Sindh, 20,077 in Punjab, 7,905 in Khyber-Pakhtunkhwa, 3,407 in Balochistan, 1,641 in Islamabad, 619 in Gilgit-Baltistan and 209 in Pakistan-occupied Kashmir.

So far 1,167 people have died of the COVID-19 including 34 who lost their lives in the last 24 hours. A total of 17,482 patients have recovered from the deadly contagion.

The authorities have conducted 483,656 tests in the country, including 10,049 on Sunday. The trajectory showed that the number was steadily going up with authorities fearing a rise in cases in the wake of the easing of lockdown before Eid which was observed in the country on Sunday.

New Delhi, Mar 9: A war of words broke out between the BJP and the Congress on Sunday over the Yes Bank crisis with the ruling party seeking to link it with the Gandhi family, while the opposition wondered if the prime minister and finance minister were "complicit" as the bank's loan book grew manifold.

Posting on Twitter a clip of a news channel report that Rana Kapoor, the arrested Yes Bank founder, had bought a painting from Congress leader Priyanka Gandhi Vadra, BJP's information and technology wing in-charge Amit Malviya alleged that every financial crime in India has "deep links" with the Gandhis.

The Congress dismissed the charge "fake" and called it a "diversionary" tactic.

It said Priyanka Gandhi had sold an M F Hussain painting of her father Rajiv Gandhi to Kapoor for Rs 2 crore, and the entire amount was disclosed in her income tax return of 2010.

Malviya tweeted, "Every financial crime in India has deep link with the Gandhis. Mallya used to send flight upgrade tickets to Sonia Gandhi. Had access to MMS (Manmohan Singh) and PC (P Chidambaram). Is absconding. Rahul inaugurated Nirav Modi’s bridal jewellery collection, he defaulted. Rana bought Priyanka Vadra’s paintings."

Congress' chief spokesperson Randeep Surjewala asked how does an M F Hussain painting of Rajiv Gandhi sold 10 years ago by Priyanka Gandhi to Yes Bank owner Rana Kapoor and disclosed in her tax returns connect with unprecedented giving of loans of Rs 2,00,000 crore in five years of the Modi government.

"More so, when (Kapoor's) proximity to BJP leaders is well known," he said.

Rubbishing the BJP's allegation, Congress spokesperson Abhishek Manu Singhvi at a press conference said it was a "diversionary" tactic by the government.

He noted that the bank's loan book rose from Rs 55,633 crore in March 2014, the year Narendra Modi became prime minister, to Rs 2,41,499 crore in March 2019.

"Why did the loan book rise by 100 per cent in two years after demonetisation i.e from Rs 98,210 cr in March 2016 to Rs 2,03,534 ar in March 2018? Were PM and FM sleeping, ignorant or complicit?" he asked.

The entire amount Priyanka Gandhi had received was in cheque and was fully disclosed in the income tax return, Singhvi said.

Surjewala, taking to Twitter, said instead of diverting from the real issue of people's money sinking into a bad bank, should not the government answer questions like how did loans given by Yes Bank rise from Rs 55,633 crore in March 2014 to Rs 2,41,499 crore in March 2019, an increase of almost Rs 2,00,000 crore in fiver years of the Modi government.

Why did the loans given by Yes Bank rise by a whopping 100 per cent in just two years after demonetisation, he asked.

Surjewala also questioned why did the prime minister address a conference sponsored by Yes Bank on March 6 despite the RBI moratorium.

"Why did the Haryana BJP government deposit over Rs 1,000 crore in Yes Bank a month ago, knowing that it was sinking? Is this figure Rs 3,000 cr? Did Fadnavis government in Maharashtra make similar deposits?" Surjewala asked.

"Of course, the government's media proxies won't dare to ask these questions. But the nation wants to know!" he said in a series of tweets.

Kapoor, 62, was arrested by the Enforcement Directorate in Mumbai after charges of alleged financial irregularities and mismanagement in the bank's operations surfaced and the RBI and Union government initiated action to control its affairs.