How do fiscal and monetary policies under the fixed exchange rate in Saudi Arabia help the country to increase the living standard? What are the goals of the monetary and fiscal policies, and how are they achieved? What are the challenges that the country may encounter on the journey to achieve these goals?
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One of the challenges that Saudi Arabia may encounter when achieving these goals is the rising income inequality in the country. Even though Saudi Arabia generates more than $200 billion from oil revenue, approximately 20% of its population is still living in poverty (Amran et al., 2020). The second challenge is the changes in technology that have been having significant disruptions in the job market leaving many jobs obsolete hence increased unemployment. The third challenge is the increased rate of migration into Saudi Arabia where the current rate is at 16.8% (Khraif et al., 2019). Most of the immigrants are low-skilled workers from different countries like the Philippines, Pakistan, Indonesia, India, and Bangladesh.
