Riyadh:Saudi Arabia canceled bonus payments for state employees and cut ministers’ salaries by 20 per cent, steps that further spread the burden of shoring up public finances to a population accustomed to years of government largesse.
The government also decided to suspend wage increases for the lunar year starting next month and curbed allowances for public-sector employees, according to royal decrees and a cabinet statement published by state media. The salaries of members of a legislative body that advises the monarchy were cut by 15 percent.
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By curbing what many Saudis had for years taken for granted, the government is signaling a determination to reduce the highest budget deficit among the world’s 20 biggest economies amid low oil prices and a lingering war in neighboring Yemen.
The measures, however, risk deepening the kingdom’s economic slowdown by damaging consumer confidence. Saudi stocks plummeted in early trading on Tuesday.
While the government needed to save money, canceling bonuses may affect Saudis “psychologically,” according to Saleh Al Qarni, a government school teacher who also works as a driver to earn extra cash.
“For me as a teacher, it might affect me in school, honestly,” he said as he drove his white Lexus Monday evening through the crowded streets of the capital, Riyadh.
Under Deputy Crown Prince Mohammed bin Salman, the world’s biggest oil exporter has already delayed payments owed to contractors and started cutting fuel subsidies as it tries to manage lower oil prices. The budget deficit may narrow to 13 percent of gross domestic product this year and below 10 percent in 2017, according to International Monetary Fund estimates.
