MANY Saudis saw in the new year by posting photos of their Starbucks receipts on social media. On January 1st the kingdom imposed its first-ever value-added tax (VAT), a 5% levy meant to help close a yawning budget deficit. It covers most goods and services, though sectors like health and public transport are excluded. (The United Arab Emirates did the same.) Some Saudis were angry about the higher cost of living. Others complained of being overcharged. But the reform, like others promoted by Muhammad bin Salman, the crown prince, went off with little real fuss.
Unveiled in December, the kingdom’s new budget of $261bn is its largest ever, a further reversal of a belt-tightening scheme imposed after oil prices crashed in 2014. Ministries had been ordered to slash their spending on new contracts by 5% in 2016, cuts that helped push the economy into recession. The new budget calls for a big boost in capital spending and an 11% bump in the health-care budget.
It also means a deficit of $52bn,...Continue reading
Source: Middle East and Africa http://ift.tt/2ms4PEh
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