Saudi Arabia will spend more than $5 billion on social security payouts and shoring up strategic reserves, as the oil rich kingdom feels the bite of global inflation.
Saudi Arabia has fared relatively well in managing inflation, with consumer prices rising by 2.2 per cent last month, but Saudis have begun to feel the impact of rising prices.
The royal court directed about $2.8 billion in direct payouts to people registered with social security and to the Citizens Account, a basic income programme, the statement said.
The rest would be allocated towards “shoring up strategic reserves of basic goods”, the official state news agency reported on Monday.
The decision came after an economic affairs committee led by Crown Prince Mohammed bin Salman, the country’s day-to-day ruler who is overseeing the country’s economic reforms, conducted a study on global prices and their possible impact on Saudis, the statement said.
Saudi Arabia, the world’s largest oil exporter, has traditionally tied the volatility of crude prices to state spending. It has been one of the main beneficiaries of high oil prices this year.
But after posting a $15 billion surplus in the first quarter this year, the finance minister said the government intended to use the money to bolster its wealth fund and shore up government reserves, as it ploughs ahead with plans to shake up its oil-reliant economy.
The country’s foreign reserves have dipped to $453bn, down from a peak of $700bn in 2014. It also has about SR338bn ($90.1bn) in local currency reserves.