Saudi Arabia

Saudis who switched on a popular talk show last week to listen to officials explain why state employees had their take-home pay cut were in for a shock, Bloomberg News reported. Within minutes of the start of MBC1’s “Al Thamena” program, viewers were told that the public sector was bloated. Civil Service Minister Khalid Al-Araj said state workers were productive for no more than an hour a day, but see their jobs as a right. Mohammad Al Tuwaijri, the deputy economy minister, said without the recent austerity measures, the kingdom would have gone bankrupt in three to four years.

Low oil prices and an increasingly costly war in Yemen have torn a yawning hole in the Saudi budget and created a crisis that has led to cuts in public spending, reductions in take-home pay and benefits for government workers and a host of new fees and fines, the International New York Times reported. Huge subsidies for fuel, water and electricity that encourage overconsumption are being curtailed. For Almarai, one of the top brands in the Middle East, that will mean $133 million from the bottom line this year, company officials said.

Ahead of a multibillion-dollar bond issue, Saudi Arabia warned investors of the challenges that cheap oil poses to its economy and said it would take 70 years to sell all of its oil, prompting concerns that some of it could go unrealized, The Wall Street Journal reported. The disclosures—included in the government’s bond prospectus issued on Tuesday—raise questions over the ability of the oil-dependent kingdom to quickly turn around its economic fortunes after more than two years of low crude prices.

The Saudi Ministry of Commerce and Investment has published a new bankruptcy draft law and invited feedback those interested, with their opinions and suggestions before the deadline of October 27, Al Arabiya reported today. The Ministry of Commerce said that the bankruptcy law will enable stalled projects to be completed taking into consideration the financial constraints and to carry forward the business or to liquidate them if need be, while at the same time guaranteeing the rights of creditors and other stakeholders.

Saudi Arabia’s central bank stepped up efforts to support lenders in the Arab world’s biggest economy as they grapple with the effects of low oil prices, Bloomberg News reported.

The Saudi Arabian government has ended talks aimed at saving construction giant Saudi Oger, which is now facing the prospect of a multi-billion-dollar debt restructuring to stave off collapse, according to sources aware of the matter. Oger, owned by the family of former Lebanese Prime Minister Saad Hariri, was one of two mega-contractors charged with implementing the grand infrastructure and development plans of the kingdom, building everything from defense installations to schools and hospitals.

Saudi Arabia, faced with dwindling oil income, has sharply increased government fees such as visa charges as part of a range of measures aimed at raising revenue from non-oil sources, The Wall Street Journal reported. Under the new rules approved by the Saudi government, foreigners will have to pay $800 for a six-month visa, six times the current cost.

Saudi Arabia’s non-oil economy has slipped into a technical recession for the first time since the 1980s, compounding the woes of a country already grappling with an oil sector pummelled by low prices, the Financial Times reported. The country’s non-oil sector contracted 0.7 per cent year on year in the first three months of 2016, according to official data. This follows on from a weak fourth quarter of 2015, which the country’s statistics agency has now revised to show a 0.5 per cent year-on-year fall in non-oil output, rather than the 3.5 per cent rise originally reported.

After weeks of fasting, affluent Saudis typically spend, feast and travel as they celebrate Eid to mark the end of the holy month of Ramadan. Families gather in gleaming malls from Riyadh to Jeddah, picking up bargains and eating at restaurants. But this year, the celebrations took place in a distinctly more frugal climate, one clouded by fragile consumer confidence and a stuttering economy as Saudi Arabia reels from the plunge in oil prices and the impact of government austerity measures.

Saudi Arabia’s $72bn National Transformation Plan imposes a hefty 346 targets on ministries and governmental bodies with the ambitious goal of ending decades of addiction to hydrocarbon revenues and transforming an economy reliant on the state, the Financial Times reported. The pet project of Mohammed bin Salman, the powerful deputy crown prince, the plan’s targets include creating 1.2m private sector jobs in the next five years, with the aim that half of all Saudis will seek employment outside of the state sector by 2020. Here are five key themes in the 112-page document.