Saudi Arabia will spend more than $5 billion on social security payments and bolstering strategic reserves as the oil-rich kingdom feels the bite 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 rising prices.
The Royal Court directed about $2.8 billion in direct payments to people registered for social security and the Citizens Account, the basic income program, the statement said.
The rest would be allocated to “cover strategic reserves of essential goods”, the official state news agency announced on Monday.
The decision came after an economic affairs commission headed by Crown Prince Mohammed bin Salman, the country’s day-to-day ruler who oversees 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 crude price volatility to government 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 of this year, the finance minister said the government intends to use the money to boost its wealth fund and shore up government reserves as it moves forward with plans to shake up its oil-reliant economy.
The country’s foreign exchange reserves fell to $453 billion, down from a peak of $700 billion in 2014. It also has about SR338 billion ($90.1 billion) in local currency reserves.