Saudi said to delay subsidy cuts amidst economic pain

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Saudi Arabia is trying to rein in spending and reduce dependence on oil after a global slump in crude prices. Energy-subsidy reform is a key part of the reform plan, along with the sale of stakes in state-owned entities, including the world’s biggest crude exporter known as Saudi Aramco. The kingdom raised fuel prices in December 2015 and announced plans for more hikes. But gross domestic product shrank by 0.5% in the first quarter, showing the scale of the challenges the government may face as it seeks to overhaul an economy still reliant on a struggling oil industry.

The government plans to raise energy prices in October at the soonest and most likely early next year, according to the people, who asked not to be identified because the information isn’t public. Energy Minister Khalid al-Falih said in December that the next increase “will not be late in 2017.” A spokesman for the finance ministry declined to comment last week. Spokesmen at the economy and energy ministries were not immediately available for comment.

Payments to low-and middle-income Saudis to help them adjust to the subsidy cuts and other austerity measures, expected to begin this month, have also not started. The benefits programme, called the Citizen’s Account, will take effect before energy prices are raised No date has been set yet, said Yaser Al-Zahrani, a media centre official for the programme.

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