Most countries in the region decided to take austerity measures along with incentive packages to mitigate the damage, while exacerbating the financial losses of their economies due to the repercussions of the “Corona” pandemic, which makes people wait for difficult economic months that may be prolonged.
Arab countries have cut public spending in light of Corona’s impact on government budgets, led by Saudi Arabia, Oman and Dubai, while a number of countries have indicated possible austerity measures during the coming period, such as Egypt and Iraq.
Jihad Azour, director of the Middle East and Central Asia Department at the International Monetary Fund, expected exports of oil-exporting countries in the Middle East to decrease by $ 220 billion during 2020, due to the effects of Corona on the global economy.
Azour estimated, in press statements, that the financial deficit of the countries of the region is expected to exceed 10 percent of the gross domestic product during the current year.
The Director of the Middle East Department called for adopting more financial and monetary policies, such as strengthening social support, tax aid and facilities, government guarantees, and financial and financial support to mitigate the effects of Corona.
He explained that the countries of the region spent 64 billion dollars on measures to confront Corona, as the central banks moved quickly, and infosin more than 47 billion dollars into the countries of the region during the first weeks of the crisis.
Saudi Arabia (the largest economy in the region)decided, on Monday, to suspend the exchange of the high cost of living for its citizens starting from next June, as one of the methods of rationalizing the spending that it started recently to confront the decline in revenues resulting from the drop in oil prices and the economic consequences of the Corona pandemic.
The value-added tax rate increased from 5 percent to 15 percent, starting in July 2020.
These measures come as a complement to the decisions taken previously to reduce spending in the budget by 5 percent, freeze activities and cancel other activities, to reduce the aggravation of the negative effects of the crisis in its various health, social and economic aspects on the country.
The value of austerity measures in the Kingdom is about 100 billion riyals ($ 26.66 billion), which included the cancellation, extension or postponement of some items of operating and capital expenditures, to a number of government agencies, and a number of initiatives to achieve vision and major projects for the fiscal year
As for Egypt, Prime Minister Mostafa Madbouly on Wednesday instructed members of his government to start implementing a plan to control and rationalize expenditures, in a move aimed at facing the economic and financial consequences of the Corona pandemic.
And a local media quoted Madbouly as saying that the government decision coincides “with the difficult economic conditions that the world is currently facing due to the repercussions of the Corona pandemic,” hoping that this period will not be prolonged.
Last week, the government raised its forecast for the current fiscal year 2019/2020 budget deficit, to 7.9 percent, up from 7.2 percent, according to earlier forecasts.