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?
Saudi Arabia adopted a fixed exchange rate in 1986 where the USD /SAR exchange rate has remained at 3.75 (Mahmood & Alkhateeb, 2018). The monetary and fiscal policies in any economy have positive or negative consequences in any economy. In Saudi Arabia, fiscal policies mainly deal with different forms of government spending and taxation. Under a fixed exchange rate, the government can generate stable revenue through taxation every year that is not affected by fluctuations in the exchange rate. The stable revenue enables the government to spend on various development projects that improve the living standards of Saudi Arabia