Saudi largesse may cost Dh5.8bn
Kingdom’s finance minister, however, says the expense should not affect the overall budget or the budgeted deficit
ABU DHABI // Saudi Arabia’s treasury will pay between 5 billion riyals and 6 billion riyals ( Dh5.87bn) to comply with King Salman’s decree on issuing back payment of allowances and bonuses to civil servants.
The kingdom’s finance ministry yesterday said the payments – which were stopped for seven months – would make up between 0.6 and 0.7 per cent of this year’s budget and would be covered by contingency funds.
“This should not impact the overall budget or the budgeted deficit, but we expect that it will contribute towards increased consumer spending and confidence,” said finance minister Mohammed Al Jadaan.
He said that would boost economic growth and ensure stable consumer demand.
Mr Al Jadaan said the decree, announced on Wednesday, was part of a series of decrees accompanying the appointment of Prince Mohammed bin Salman as the new crown prince.
He said they would not affect the goal of balancing the kingdom’s budget by 2020. The spending would be offset by new sources of revenue such as the rise in fees for the dependents of expatriate residents, which was set to begin next month, said the finance minister. Last September, King Salman announced that allowances and other benefits for civil servants – who make up two thirds of the kingdom’s Saudi workforce – would be cut because of the budgetary strain caused by low oil prices over a protracted period. Prince Mohammed, who is leading efforts to liberalise Saudi Arabia’s economy and expand the private sector, had said austerity measures were necessary for long- term reforms.
But the government stopped the cuts in April amid growing disquiet among Saudi nationals and businesses, as well as the finance ministry’s desire to stimulate the flagging economy.
The reversal suggests there are limits to the swift roll-out of aus- terity measures before gradual economic reforms create jobs for Saudis. There are also questions about the sustainability of the back payment of benefits, as Saudi- led efforts to shore up oil prices have delivered mixed results.
The kingdom’s about-turn on austerity measures came amid Prince Mohammed’s elevation. The new crown prince has fostered close ties to the White House, with US president Donald Trump calling Prince Mohammed on Wednesday to congratulate him and discuss bilateral cooperation on counterterrorism efforts and deepening economic ties.
They also “discussed the priority of cutting off all support for terrorists and extremists, as well as how to resolve the ongoing dispute with Qatar”, the White House said. Mr Trump has backed Saudi and UAE measures to isolate Qatar over its support for extremist groups, but he has also offered to mediate between the three countries.
US secretary of state Rex Tillerson has expressed support for Kuwait’s shuttle diplomacy between the Arabian Gulf countries.
He said he hoped Saudi Arabia and the UAE would soon present their list of demands to Doha that would be “reasonable and actionable”.
The US state department earlier criticised the UAE and Saudi Arabia for not presenting Qatar with a list of specific concessions they seek from Doha.
Finance ministry says the payouts would make up between 0.6 and 0.7 per cent of this year’s budget