Riyadh - Mubasher: Saudi Arabia's austerity measures have increased Saudi nationals’ lending more than twice this year, compared with the prior-year period.
In a bid to boost revenue without stifling economic growth, the GCC nation has raised fuel and electricity prices as of 2018, along with introducing the value added tax and imposing a levy on some temporary foreign workers who are not under an employer’s sponsorship.
The government's plans to increase public finances have put living costs on the rise. The latest official loan data show that ordinary citizens felt the pinch of this policy, according to Bloomberg News.
“Household finances are stretched, so people are turning to credit in order to finance big-ticket expenses such as cars and furniture and day-to-day expenses,” said Jason Tuvey, an emerging-market economist at London-based Capital Economics told the New York-based news agency.
In the same vein, education loans went up to SAR 3.69 billion ($984 million) in the first three months of this year, compared to SAR 1.02 billion in the same quarter a year earlier, according to the Saudi Arabian Monetary Authority's (SAMA) data.
Consumers’ lending to buy furniture and vehicles jumped 152% and 85%, respectively, the central bank’s data found.
Since the Saudi government introduced its measures to balance the budget, consumer prices have surged. The oil-rich kingdom's 2017 deflation turned to around 3% inflation rate.
Meanwhile, income is under pressure from soaring unemployment. The rate of Saudi unemployment has increased to 12.9% in Q1-18, compared to Q4-17.
“Households have seen their disposable incomes squeezed over the past two years” and citizens “likely have less funds immediately available with which to pay their education fees,” Daniel Richards, an analyst for the Middle East and Africa at Emirates NBD, said.
