Saudi Arabia is rationalizing its Citizens' Accounts Program spending, trying to reduce overall spending while still aiding the neediest. In doing so, it risks both undermining public support for necessary economic reforms and incentivizing the government to create new, expensive subsidies. The kingdom has trimmed almost 2 million people from CAP, a cash transfer program, since April 2020, CAP press release data shows; the largest decline occurred between June and July. 

• Payments to the accounts had declined by 1 billion riyals (about $267 million) by July, down from 2.7 billion in March. 
• The government said it was tightening controls over who received benefits and closing loopholes for beneficiaries, including by removing people who lived with families, while bolstering direct aid to what the state categorized as more impoverished Saudis.

The budget reductions for the program will exacerbate financial difficulties for affected poorer Saudis at a time when they are also losing options for replacement income in the private sector to offset higher consumer prices from an increase in the kingdom's value-added tax.

• COVID-19 related lockdowns and low energy prices have hammered the economy and could see it shrink by as much as 6.8 percent, according to the International Monetary Fund. 
• Saudi Arabia has also recently tripled its VAT from 5 percent to 15 percent to help state finances and to achieve some of the goals of Vision 2030.
• Already-high Saudi unemployment has also worsened during the pandemic as tourism closures, particularly during the hajj, shut down large parts of the non-oil sector. The IMF is projecting no new economic growth for Saudi Arabia until 2021 at the earliest, and not until a vaccine for COVID-19 is developed. 

Without viable private sector employment options, prior behavior suggests public support for reform may weaken, even spurring some backlash.

• Riyadh introduced CAP in December 2018 in response to public complaints about the impact of newly-introduced VAT on household budgets. This built on a decadeslong legacy of providing direct and indirect subsidies to Saudis in exchange for political acquiescence to the absolute monarchy and in an attempt to increase public buy-in for the economic reform efforts that foresee a steady reduction in state subsidies for Saudis. 
• The public has remained resistant to economic restructuring that includes such reductions as illustrated by the online pushback to electricity and water subsidies, and so far, few reforms have been enacted that deeply alter the relationship between the Saudi welfare state and its citizens.
• Cuts to CAP that constrain citizens' buying power may manifest in tribal and familial protests to officials and online as some Saudis complain about being unable to afford everyday goods and services. If the Saudi government believes these protests could significantly undermine the loyalty of key tribes, families or regions, they might consider other subsidies to attempt to offset the economic pressure felt by those affected by changes to CAP.