The scaling back of the cash transfer programme for citizens in Saudi Arabia has dealt a financial blow to about two million Saudis, according to a Bloomberg report.

About three months ago, the 'Citizen's Account' programme, which is run by the Ministry of Labour and Social Development, changed its eligibility rules, stopped payouts in millions of cases and set an upper limit for assistance.

According to the news report, about 1.3 million Saudis lost out on the benefits in July alone.

The shrinking financial assistance to millions of Saudis is expected to have an impact on the purchasing power of the Saudis due to reduced income and higher costs.

The Saudi government has said that the plan to withdraw assistance is not related to the twin shocks of oil crisis and COVID-19 pandemic. However, the roll-back couldn't have come at a worse time for the Saudis who were already reeling from the country's austerity measures such as tripling of value-added tax from 5 percent to 15 percent.

The government claims that it is reorienting the rules of the programme to target more deserving citizens.

Unveiled by Saudi Crown Prince Mohammed bin Salman in 2016, the key government initiative was implemented from 2017 to protect low- and middle-income Saudi families from the impact of various economic reforms. The aid is offered through direct cash transfers to beneficiaries on a monthly basis.

(Writing by Mily Chakrabarty; editing by Seban Scaria)

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