Saudi Arabia to broaden Hajj, Umrah services for revenue
RIYADH (Web Desk) - Saudi Arabia is planning to broaden
pilgrimage services as part of a diversification strategy to reduce its
dependence on falling oil revenue, reported the Saudi Gazette newspaper.
Economists consider Hajj and Umrah as vital sectors with significant growth potential and ability to create more job opportunities for young Saudi men and women.
Umrah is an extra, optional pilgrimage to Mecca and does not count as the once-in-a-lifetime Hajj pilgrimage. It can be undertaken at any time of the year, in contrast to Hajj.
The pilgrimage industry is the country’s second most important after oil and gas. Nearly two million foreign pilgrims visit the holy city of Makkah annually during Hajj while the figure is expected to reach 2.7 million by 2020.
According to the report, the tourism sector contributes $22.6 billion (85 billion Saudi riyals) to Saudi Arabia’s GDP with Hajj and Umrah providing a whopping $12 billion (45 billion Saudi riyals).
With the completion of expansion projects at the two holy mosques in Makkah and Madinah, the revenue from the sector is expected to double.
National Tourism Committee member Abdul Ghani Al-Ansari emphasized the need to restructure the sector to make it a major contributor to the national economy.
Economist Abdullah Katib estimates the annual revenue from the Hajj season at $5.3-6.1 billion (20-23 billion Saudi riyals) depending on the number of pilgrims.
“About 40 percent of this revenue comes from housing, 15 percent from gifts, 10 percent from food and the remainder from other services,” Katib said.
Lately, experts have been repeatedly warning that Saudi Arabia will soon run out of money.
Last month the International Monetary Fund (IMF) predicted years of higher taxes and low fuel subsidies for the oil-rich country. Saudi Arabia will need to stop relying so heavily on oil revenues, said the IMF.
The Kingdom is facing a budget deficit which is expected to reach $87 billion this year. The crude price crisis has had an impact on the economy as oil sales account for almost 80 percent of the country’s revenue. Saudi Arabia’s foreign reserves fell to $640 billion last year from $737 billion in 2014.
The country’s construction sector has been hit hard by spending cuts as the government wants to preserve cash.
In an effort to balance the budget Saudi Arabia’s government had already cut spending, sold bonds and tapped foreign reserves to compensate for the negative effect on the economy of the oil price plunge. It is also planning its first sale of international bonds.
Economists consider Hajj and Umrah as vital sectors with significant growth potential and ability to create more job opportunities for young Saudi men and women.
Umrah is an extra, optional pilgrimage to Mecca and does not count as the once-in-a-lifetime Hajj pilgrimage. It can be undertaken at any time of the year, in contrast to Hajj.
The pilgrimage industry is the country’s second most important after oil and gas. Nearly two million foreign pilgrims visit the holy city of Makkah annually during Hajj while the figure is expected to reach 2.7 million by 2020.
According to the report, the tourism sector contributes $22.6 billion (85 billion Saudi riyals) to Saudi Arabia’s GDP with Hajj and Umrah providing a whopping $12 billion (45 billion Saudi riyals).
With the completion of expansion projects at the two holy mosques in Makkah and Madinah, the revenue from the sector is expected to double.
National Tourism Committee member Abdul Ghani Al-Ansari emphasized the need to restructure the sector to make it a major contributor to the national economy.
Economist Abdullah Katib estimates the annual revenue from the Hajj season at $5.3-6.1 billion (20-23 billion Saudi riyals) depending on the number of pilgrims.
“About 40 percent of this revenue comes from housing, 15 percent from gifts, 10 percent from food and the remainder from other services,” Katib said.
Lately, experts have been repeatedly warning that Saudi Arabia will soon run out of money.
Last month the International Monetary Fund (IMF) predicted years of higher taxes and low fuel subsidies for the oil-rich country. Saudi Arabia will need to stop relying so heavily on oil revenues, said the IMF.
The Kingdom is facing a budget deficit which is expected to reach $87 billion this year. The crude price crisis has had an impact on the economy as oil sales account for almost 80 percent of the country’s revenue. Saudi Arabia’s foreign reserves fell to $640 billion last year from $737 billion in 2014.
The country’s construction sector has been hit hard by spending cuts as the government wants to preserve cash.
In an effort to balance the budget Saudi Arabia’s government had already cut spending, sold bonds and tapped foreign reserves to compensate for the negative effect on the economy of the oil price plunge. It is also planning its first sale of international bonds.
Arcile by: dunyanews
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