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MENAFN - Arab News - 16/12/2013

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(MENAFN - Arab News) The value of government subsidies to diverse commodities has been estimated at SR300 billion to SR350 billion annually, local media said quoting economic experts.
The government-subsidized commodities go to citizens and residents on an equal footing and whereas per capita subsidy stands at SR12,500 annually, the share given to foreigners is estimated at SR100 billion, one of the experts was quoted by the Al-Hayat daily as saying.
Fahad bin Jumaa, deputy head of energy and economic affairs committee at Shoura Council, said subsidies allocated for the energy sector (gasoline and electricity) stood at SR300 billion in the current year.
However, gas is not included in the above figure because gas in the Kingdom was being sold at a subsidized price of 0.74 per million British thermal unit (MMBTU) while it is sold at 3.36 in global markets, he said.
He said the volume of subsidies is not normally publicized and not included in the state budget adding that oil per capita consumption is derived from figures of the International Energy Agency (IEA), estimated at 35 barrels per year, or 3,500 (SR13,125), which is too high.
Some steps have been taken to correct the current prices (subsidies) including the introduction of a fuel consumption card system. Part of subsidies comes from what the expert termed as customs reduction channels.
He affirmed that an individual in the Kingdom, whether acitizen or a resident, is spending too much money from the state budget but said it is difficult to provide specific data on how the departing foreign workforce will affect the position of subsidies in the Kingdom.
For his part, Nazir Al-Abdullah, another economist, says subsidy cuts will not merely come from deportation of expatriate workers. The new workforce and population growth should also be taken into consideration, he said.
Every year, the Kingdom is registering growth in population which makes it difficult to assess the volume of annual subsidies given to diverse commodities, he said.
He says disparity exists on figures related to the value of subsidies. Some figures suggest SR300 billion while others say the value may reach SR350 billion because subsidies in the energy sector are not published, he pointed out.
Much of subsidy is not normally calculated because it is being provided by the government in the form of raw materials for various types of industries such as oil and its derivatives, gas, electricity, desalinated water, petrochemicals, metals, and cement. Such raw materials are sold at cheap prices compared to global prices, he said.
He voiced hope that the government disclosure over its support to commodities will boost community awareness on the importance of consumption rationalization.
He, however, said government support to commodities or services is not something new because many countries are following the same policy in certain cases.
The economist said the government of the Custodian of the Two Holy Mosques is subsidizing several commodities, directly or indirectly, the latest were the customs tariff relief provided to a variety of commodities.

 






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