Saudi Arabia 2015 budget in the current period of low oil prices

Saudi Arabia rumours about wage cuts
Riyadh by night

Riyadh by night

An official said in a statement to the Saudi Press Agency (SPA) that Public salaries and allowances will not be slashed in an effort to curb spending during the current period of low oil prices.

The statement follows comments on social media about a report, which indicated that the government is toying with a potential reduction in public expenditure to offset a $39 billion deficit in its 2015 budget.

An unnamed government official denied comments on social media about the government about to opt for a reduction in public expenditure.

A report by Associated Press last week also quoted SPA as saying that there would be “more efforts to reduce current expenditures, especially expenses of salaries, wages, allowances and the like, which represent nearly 50 % of the approved budget expenditures” for 2015.

An unnamed finance ministry official however brushed away such rumours, and said:

“The comments on social media that the government plans to cut wages, is baseless and has no validity,” adding: “Neither Finance Minister Ibrahim Al-Assaf nor any other official from the ministry have made statements in this regard.”

Saudi Arabia had almost always relied on its public sector for its job creation programmes that over time resulted in a population that generally has definite preferences.

Based on quoted statistics from the Central Bank and an International Monetary Fund (IMF) recent report, the public sector employed about 9 out of 10 working Saudi Nationals, warning at the same time that reducing such reliance on public-sector jobs must be a priority for the world’s largest oil producer and doing so would ensure long-term growth.

The government started a policy shift in favour of the private sector in the last two years but despite its efforts, the uptake in this sector has not been to expectations which according to a report by the Riyadh Chamber of Commerce and Industry (RCCI) earlier this year, only 1,760 Saudis applied for over 11,750 vacancies that were made available by 70 private companies and other organisations in Riyadh.