In an effort to promote transparency in the national budget, the government of Saudi Arabia recently announced budgetary figures for the first time on a quarterly basis. Saudi Finance Minister Mohammad Al Jadaan said last Thursday the deficit had dropped to 26 billion Saudi riyals (Dh25.46 billion) in the first three months of 2017.
Total revenues for the first quarter increased 72 per cent from the same quarter last year. Oil revenues were notably up in the first quarter with a growth rate of 115 per cent from the same quarter last year, driven by a hike in crude prices in international markets. Non-oil revenues for the first quarter were reported at 32 billion riyals, a one per cent increase from the same quarter last year.
The country’s budget deficit was initially projected at $53 billion for 2017, after an even bigger deficit last year that prompted subsidy cuts, delays in projects and a temporary freeze on salaries and bonuses to government employees. “This is a very encouraging figure and clearly reflects our aim to achieve a balanced budget in 2020,” Jadaan said.
The positive figures prompted King Salman Bin Abdul Aziz late last month to restore all previously frozen benefits to government sector employees, much to the joy of a sizeable ratio of the working population in the country. In September last year, the state froze salaries and reduced benefits for civil servants, who comprise the bulk of the workforce, as part of austerity measures. The responses to the restoration of benefits ranged from extremely favourable to cautious. Echoing his sentiments, Hussain, a Saudi oil analyst said: “I believe the government’s reinstatement of all previously frozen benefits is a good move as it will spur economic growth. During the period of austerity, commercial activity had dropped down to alarming levels as people stopped purchasing. This in turn had an effect of a mini-recession with very little monetary activity. By its actions, the government has restored hope in the people and more spending power in their pocket.”
Mahmoud, a human resources consultant, on the other hand disagreed: “Was the government’s decision to restore benefits that were frozen a few months ago based on proper economic studies or were they swayed into it? Lest we forget, the deficit is still forecast to be 198 billion Saudi riyal in 2017, not something to open the treasury coffers for. The austerity measures should have continued through the year to allow more breathing room for our national budget that has taken a beating due to falling global oil prices. I for one am not sure that the restoration of benefits is good in the long term.”
Khalid, a sociologist working on his doctorate at a prestigious university in the United Kingdom, said: “It was only last September that the government cancelled bonuses for state employees and cut ministers’ salaries by 20 per cent — steps that were taken to prevent the national debt to reach alarming proportions. Since that time in the past seven months or so, the people had to adjust spending habits and lifestyles, which actually was a good thing. It toned down undisciplined spending habits prevalent among Saudi households. It was also a message to convey to job seekers to search for other employment opportunities instead of just the state.”
The sociologist was echoing the words of a prominent media figure who had this to say when the austerity measures were first announced last September: “The politics of waste must end — they have to. Money was flowing and there was no accountability. Now the shock has come. We have to wake up, especially people who are not working. We have to start doing things on our own, depend on our own selves. We have to get up and work, and work really hard — ensure productivity in factories and clean up our own places. For years, it has been a free ride on the government’s shoulders. Now is the time for us to give back.”
Mona, a successful businesswoman heading a national enterprise, said: “Look, we have money in this country. Plenty of money. The finance ministry just has to be more prudent and selective on how it is spent. A report late last year said the kingdom loses billions annually due to shoddy practices in construction projects. Imagine that! Now if there is more accountability for every riyal earned and spent, we can manage to remain above water. Also, I suspect that wealthy private citizens are not doing their part in ensuring an economic resurgence. They seem to be more interested to salt away their fortunes in foreign banks than pump that money back into the local economy. What a way to display national loyalty!”
Austerity measures may be reintroduced as announced by a government spokesman, based on economic compulsions. What is needed, though, then at these times, is a sense of balance between fiscal prudence and the personal needs of people in Saudi Arabia.
Tariq A. Al Maeena is a Saudi socio-political commentator. He lives in Jeddah. You can follow him on Twitter at twitter.com/@talmaeena.
