Saudi Arabia will spend more than $5 billion on social security payments and amassing strategic reserves, as the oil-rich kingdom feels the impact of global inflation.
Saudi Arabia has kept inflation relatively well under control, with consumer prices rising 2.2% last month, but Saudi Arabia has begun to feel the impact of rising prices.
The royal court directed about $2.8 billion in direct payments to those registered with social security and to the Citizens Account, a basic income scheme, the statement said.
The rest will be allocated for the purpose of “strengthening strategic reserves for basic goods”, the official state news agency reported on Monday.
Muslim pilgrims shop at a market in Saudi Arabia’s holy city of Mecca on Monday © AFP via Getty Images
The decision came after an economic affairs committee led by Crown Prince Mohammed bin Salman, the country’s daily ruler who is overseeing the country’s economic reforms, conducted a study on global prices and their possible impact on Saudi Arabia, the statement said.
Saudi Arabia, the world’s largest oil exporter, has traditionally tied the volatility of crude oil prices to state spending. This is one of the main beneficiaries of high oil prices this year.
But after posting a $15 billion surplus in the first quarter of this year, the finance minister said the government intends to use the money to boost its wealth fund and accumulate government reserves. , as they continue with their plan to shake up the oil-dependent economy. .
The country’s foreign exchange reserves have fallen to $453 billion, down from a peak of $700 billion in 2014. The country also has about SR338 billion ($90.1 billion) in local currency reserves.