Saudi Arabia will spend more than $5 billion on social security payments and support for strategic reserves, as the oil-rich kingdom feels the blow of global inflation.
Saudi Arabia has done relatively well in managing inflation, with consumer prices rising 2.2 percent last month, but Saudis are beginning to feel the impact of higher prices.
The statement said the royal court directed about $2.8 billion in direct payments to people registered in Social Security and to the Citizens Account, the basic income program.
On Monday, the official state news agency reported that the rest would be allocated to “support the strategic reserves of basic commodities.”
Muslim pilgrims shop at a market in the Saudi holy city of Mecca on Monday © AFP via Getty Images
The decision came after the Economic Affairs Committee led by Crown Prince Mohammed bin Salman, the country’s daily ruler who oversees the country’s economic reforms, conducted a study on global prices and their potential impact on the Saudis, according to the statement.
Saudi Arabia, the world’s largest oil exporter, has traditionally linked crude price volatility to state spending. It has been one of the main beneficiaries of higher oil prices this year.
But after recording a surplus of $15 billion in the first quarter of this year, the finance minister said the government intends to use the money to boost its wealth fund and support government reserves, while it goes ahead with plans to shake up its oil-dependent economy. .
The country’s foreign reserves have fallen to $453 billion, down from a peak of $700 billion in 2014. It also has about 338 billion Saudi riyals ($90.1 billion) in local currency reserves.
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