Monday 26 September 2016 15.10 EDT
King Salman bin Abdulaziz has presided over a reform plan to wean the Saudi economy off its addiction to oil. Photo by Bandar Al-Jaloud, AFP, Getty Image
Saudi Arabia will cut ministers’ salaries by 20% and scale back financial perks for public sector employees in one of the most drastic measures yet by the energy-rich kingdom to save money at a time of low oil prices.
The measures, disclosed in a cabinet statement and royal decree broadcast on state-run Ekhbariya TV on Monday, constitute the first pay cuts for government employees, who make up about two-thirds of working Saudis.
“The cabinet has decided to stop and cancel some bonuses and financial benefits,” read a line of text on Ekhbariya, as a minister read to assembled ministers and royals, including King Salman bin Abdulaziz, a list of cuts in various grades in the civil service.
The plunge in oil prices since mid-2014 has pushed energy-rich Gulf Arab states to rein in lavish public spending.
Saudi Arabia had a record budget deficit of nearly $100bn last year, forcing it to find new savings and ways to raise money.
A royal decree read directly after the broadcast announced the cut in ministers’ pay. Housing and car allowances for members of the appointed Shura Council will be cut by 15%.
Overtime bonuses were cut to between 25% and 50% of basic salaries, while annual leave may no longer exceed 30 days.
An exception will be made for troops involved in combat along the southern border and abroad as part of an 18-month military intervention led by Saudi Arabia in neighbouring Yemen.
“It’s one more economic measure to balance spending. Of course people don’t like it, but it’s a sign of the times,” Saudi analyst and the editor of Al Arab News, Jamal Khashoggi, said.
“Probably the teachers and many others will be affected by it. It shows why it’s important for the private sector and Saudi GDP to diversify,” he told Reuters.
Saudi Arabia unveiled a reform plan this year to wean the economy off its addiction to oil, on which the government depends for the overwhelming share of its revenues.
The so-called Vision 2030 initiative aims to jumpstart the private sector, provide jobs for a growing population and collect more non-oil revenue.
The cuts to public sector perks, effective from 1 October, are the stiffest in a series of recent measures to boost revenue.
Last month the cabinet approved proposals to increase a range of government fees including visa charges and fines for some traffic violations.
It cut subsidies for power and water last December, then sacked the minister responsible following a public outcry over how the new water tariffs were applied.
Deputy Crown Prince Mohammed bin Salman, who is responsible for the sweeping economic reforms, was quoted as saying the water price increases had not been implemented as planned.
Saudi Twitter users responded to the latest announcement with dismay, many sharing photographs of former ruler King Abdullah and recalling past prosperity.
One Twitter user, Rayan al-Shamri, said the move boded ill for the future: “God be with the citizens, we are back to the time of poverty.”
Decline in Oil Prices Lands on Government Workers as Saudi Arabia Cuts Paychecks
RIYADH, Saudi Arabia — Saudi Arabia on Monday announced sudden, drastic cuts to salaries and perks for government employees as part of the kingdom’s struggle to slash spending at a time of low oil prices.
The cuts, unveiled in a series of royal decrees and cabinet statements read aloud on state television, reduced ministers’ salaries by 20 percent, slashed perquisites for members of the consultative assembly and limited overtime pay and vacation for civil servants.
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