The authorities in Riyadh stated that it will suspend its cost of living allowance to shore up state financing.
The state has seen its earnings plummet since energy rates have been driven down by the effect of the pandemic.
The kingdom introduced VAT two decades back to lower its reliance.
Saudi Arabia’s state news agency stated although the price of living allowance will be suspended from 1 VAT increases from 5 percent to 15% as of 1 July.
The Allowance of 1,000 riyals ($267; 245 euros) a month to state workers was released 2018 to help offset increased fiscal burdens such as VAT and a growth in the purchase price of petrol.
All these Steps are painful but essential to keep fiscal and financial stability over [the] moderate to long term… and conquer the unprecedented coronavirus catastrophe with the least damage potential,” finance minister Mohammed al-Jadaan stated in the announcement.
The statement came following state spending outstripped income, Pushing the kingdom to a $9bn (#7.2bn) budget deficit from the first 3 months of this year.
As petroleum earnings from the period dropped from a year before bringing earnings down by 22 percent, that is.
At The central bank of the period Saudi Arabia saw in their fastest pace in two years in March and with their lowest level since 2011.
The steps to fight with the Effect of Coronavirus are predicted to slow scale and down the rate of economic reforms.
Last year Saudi Arabia increased a record $25.6bn from the first public offering of stocks in state-owned oil giant Aramco at Riyadh.
The share sale was The core of the plans of Crown Prince Mohammed bin Salman Market and pare it off its reliance on petroleum.