Saudi Arabia said Monday it will triple the value-added tax (VAT) and suspend the cost of living allowance as part of measures to address the impact of the coronavirus crisis.

“The measures include raising VAT from 5% to 15% as of July,” Finance Minister Mohammed al-Jadaan said in a statement cited by the official SPA news agency.

He described the measures as “important to shield the kingdom’s economy to overcome the unprecedented global coronavirus pandemic and its financial and economic repercussions with the least damage possible”.

Al-Jadaan said the pandemic has caused an unprecedented slump in oil demand, decline in economic activity and a rise in expenses needed to stem the spread of coronavirus.

Al-Jadaan said the austerity measures and other cost cuts will save the kingdom 100 billion riyals ($ 26.66 billion).

“We are facing a crisis that has never been seen in modern history,” he said.

Saudi Arabia’s budget deficit hit 34.1 billion riyals ($9.1 billion) in the first quarter of 2020, with the general debt going up by 6.7% to 733.5 billion riyals ($192.9 billion).

The kingdom’s 2020 budget projected a shortfall of $50 billion.

*Ahmed Asmar contributed to this report from Ankara

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