Saudi Arabia restores state employee bonuses...

Saudi Arabia’s King Salman restored bonuses and allowances for state employees, scaling back an austerity programme that generated widespread criticism among citizens used to generous state handouts.

The government said bonuses cancelled in September were reinstated because higher-than-expected revenue helped to drive down the budget deficit. Minister of State Mohammed Alsheikh said in a statement to Bloomberg that the injection of more money was expected to stimulate economic growth, but others said the kingdom’s rulers were responding to the public discontent the cutbacks created.

The decision “constitutes a step back in terms of forging a new social contract that no longer offers the Saudi public cradle-to-grave welfare,” said James M Dorsey, a Saudi specialist and senior fellow in international studies at Nanyang Technological University in Singapore. It suggests the government is worried that its economic overhaul plan hasn’t been accepted “by segments of the population who have the most to lose from diversification and streamlining of the economy, including the bureaucracy,” he said.

King Salman also pressed on with a shakeup that has installed his children in key government positions, appointing one son as ambassador to the US and promoting another within the energy ministry. Prince Abdulaziz bin Salman was named Minister of State for Energy Affairs, while Prince Khalid bin Salman was appointed envoy to Washington.

The bonus cutbacks were announced in September as part of an ambitious plan led by Deputy Crown Prince Mohammed bin Salman to repair public finances and overhaul the oil-dependent economy in an age of depressed energy prices.