Austerity is a term commonly used to explain the condition of living without unnecessary things and without comfort, with limited money or goods BUT we have probably listened to it very often thanks to the economic crisis we have lived in this...really?... already a decade! The austerity policy has to do with sustained reductions in public spending and tax rises. The pandemic is already having devastating consequences in the world's economy, even Saudi Arabia has decided to take measures to fight the effects of this recession. Saudi Arabia used to be a good example of excess, so austerity never seemed to get into their plans.
Read the following article and do the exercises below:
"Saudi Arabia is going to triple the rate of the value added tax (VAT) it imposes on goods and services. VAT will increase from 5 per cent to 15 per cent on the 1st of July. The tax was introduced in Saudi Arabia for the first time in 2018. Government authorities say this drastic measure is necessary to curb the effects of the coronavirus pandemic on the economy. The cut is also part of wider austerity measures to help the economy. Finances of the oil-rich nation have been badly hit as the pandemic has seen oil prices and demand for oil plummet. Analysts are reporting that oil revenues this year have fallen by almost a quarter when compared to the same period last year.
Another measure the finance ministry has taken in a bid to shore up the economy is the suspension of a cost of living allowance. This is a payment of about $256 per month to state employees. It was introduced to help offset rising prices and more expensive petrol at the pump. Saudi's Finance Minister said: "These measures are painful but necessary to maintain financial and economic stability over the medium to long term...and to overcome the unprecedented coronavirus crisis with the least damage possible." A Gulf expert said: "The move will impact consumption and could also lower the expected revenues. These are pro-austerity and pro-revenue moves rather than pro-growth ones."
1. Match words and definitions:
2. Answer the questions with complete sentences.
3. Find a synonym for the following words:
attempt, actions, income, extreme, affect, applies, unheard of,
nosedive, established, counterbalance
imposes
introduced
drastic
measures
plummet
bid
offset
unprecedented
impact
revenue
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