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PLAN FOR GREEN CARD?

New Saudi measures to generate $100bn

RIYADH, April 5, 2016

New measures to raise revenue in Saudi Arabia will bring in at least an extra $100 billion a year by 2020, more than tripling non-oil income and balancing the budget, Deputy Crown Prince Mohammed bin Salman has said in an interview with Bloomberg News.

The biggest economic shake-up will accelerate subsidy cuts and impose more levies.

“It’s a large package of programmes that aims to restructure some revenue-generating sectors,” the prince said in the five-hour interview. Non-oil income rose 35 percent last year to SR163.5 billion ($44 billion), according to preliminary budget data.

While there are no plans to tax incomes, the new policies would bring the kingdom closer to the rest of the world, where governments rely on charges to fund spending, the Bloomberg report said.

The prince said authorities are weighing measures that include more steps to restructure subsidies, imposing a value-added tax and a levy on energy and sugary drinks as well as luxury items.

Another revenue-raising plan under discussion is a programme similar to the US Green Card system that targets expatriates in the kingdom.

The strategy would complement a plan to sell a stake in Saudi Aramco on the stock exchange and create the world’s largest sovereign wealth fund, steps meant to make the kingdom more reliant on investment income than oil within 20 years. The $2 trillion fund would be big enough to buy the four largest publicly traded companies on the planet, the report said.

The Saudi government is also planning to increase its debt in the meantime to help finance spending and test the market with a dollar bond later this year.

The VAT will bring in about $10 billion a year by 2020, while the “restructuring of subsidies” will generate more than $30 billion a year, said Prince Mohammed, who appeared at ease discussing technical details and figures of his various plans.

The Green Card-like programme and a plan to allow employers to hire more foreign workers above their official quotas for a fee could generate $10 billion a year each, he said.

The prince said measures taken by the council last year succeeded in lowering the budget deficit “which could have reached $250 billion to less than $100 billion.”




Tags: Saudi Arabia | economy | Oil |

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