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.
Arcile by: dunyanews