DUBAI - Saudi Arabia and the United Arab Emirates are boosting state spending on social welfare by billions of dollars as they seek to shield their citizens from rising living costs.
The UAE is doubling the financial support it provides to low-income Emirati families to 28 billion dirhams ($7.6 billion) to help them with soaring inflation in the Gulf state, while Saudi Arabia's King Salman ordered a 20 billion riyal ($5.33 billion) allocation.
The kingdom will reopen registration for the programme known as Citizens Account and allocate 8 billion riyals in additional funding for it through the end of the year.
Another 2 billion riyals will go to one-off payments to social insurance beneficiaries and 408 million riyals to a programme that supports small livestock breeders.
The UAE's expanded budget allocation, reported by state news agency WAM on Monday, includes increasing existing benefits and establishing new ones targeted at mitigating the impact of inflation on food prices, and rising fuel and household energy costs.
Some of the new benefits for Emiratis include financial support for university students and the unemployed who are over 45 years old.
James Swanston of Capital Economics said the spending boosts were equivalent to 0.6% of Saudi Arabia's GDP and 1.8% of the UAE's GDP.
"Admittedly, headline inflation in both countries has not increased as quickly as other parts of the world, but it has nonetheless risen," he said.
"Given the size of the increase in spending the overall impact on public finances will be relatively small and we anticipate that both countries will still run large budget surpluses this year."
Saudis make up nearly two-thirds of the kingdom's roughly 34 million population. The disparity in wealth among citizens is generally far wider in Saudi Arabia than in the UAE, with Saudi citizens working some blue-collar jobs.
Emiratis account for about 10% of the UAE's population of roughly 10 million people, who are mostly foreign workers and dependents.
(Reporting by Yousef Saba and Alexander Cornwell; Editing by Jan Harvey and David Evans)