Saudi Arabia and the UAE have announced billions of dollars of additional spending on social welfare spending to protect low-income citizens from the impact of rising prices.

The move by both countries reflects the increasingly comfortable fiscal position of both countries this year. Oil prices have been consistently well over $100 a barrel, leading to substantial budget surpluses for the first time since 2014.

It also breaks from the overarching trend of austerity across the Gulf over the past five years, which has involved the removal of subsidies and cuts to public spending.

In Saudi Arabia, a Royal Decree was issued approving the allocation of SR20bn ($5.3bn) as financial support to confront the repercussions of rising prices globally.

The financial support includes SR10.4bn to be distributed as direct cash transfers. There will SR2bn given as an additional one-time salary to social insurance beneficiaries, SR8bn allocated as additional financial support to the beneficiaries of the Citizen Account Programme, and SR408m given to the beneficiaries of the small livestock breeders programme.

In Abu Dhabi, President Sheikh Mohamed bin Zayed al-Nahyan has directed the restructuring of the Social Welfare Programme for low-income citizens into an integrated programme worth AED28bn ($7.6bn) instead of AED14bn.

In addition to increased spending on existing allowances, the programme includes four new allowances:

• Housing allowance
• University education allowance
• An allowance for unemployed citizens over the age of 45
• An allowance for unemployed job seekers

The UAE programme also includes an electricity and water subsidy worth 50 per cent, and reduced fuel prices. The petrol subsidy provides a monthly subsidy of 85 per cent of the fuel price increase over AED2.1 per litre. The head of the family receives a monthly subsidy of 300 litres, while the working wife receives a subsidy of an additional 200 litres. The head of the family receives a subsidy of 400 litres if the wife does not receive support.