Saudi King Orders Cabinet Reshuffle & Restores Allowances
Abu Dhabi, 24 April 2017
The King of Saudi Arabia, Salman bin Abdulaziz, issued a number of decrees this past weekend including a reversal of certain austerity measures and a minor cabinet reshuffle all of which we detail below. The most prominent announcement was the move to restore public sector bonuses and allowances, a decision which the government said was taken after a better than expected budgetary performance during the first quarter of this year, but which probably also highlights how sensitive the general population is towards austerity cuts and the delicate path the authorities need to tread in their management of this issue.
“The government has conducted a review of the measures initiated in the fall in relation to the public-sector employees’ allowances. A number of fiscal adjustment measures were taken over the last two years which led to a strong improvement in the government’s fiscal position. As a result, the actual deficit for the first quarter of 2017 is about 50% of the projected deficit in the budget due to increases on revenue side and decreases on expense side,” the Saudi Minister of State, Mohammad Al Shaikh was quoted as saying in the press. Meanwhile the local equity market has reacted positively to the move on the back of expectations that these salary adjustments would naturally lead to an increase in consumer spending.
On the political front the King appointed two of his sons* to key posts within the government, while a number of younger members of the Al Saud family were given deputy governorships across the country. These moves further identify and solidify the next generation of Saudi leadership which we believe is positive for stability, while the decision to replace the current ambassador to the US with Prince Khaled, an American trained fighter pilot who also attended Harvard and Georgetown universities, is seen as an attempt by the Kingdom to strengthen its relations with the new administration in Washington. Another interesting announcement was the dismissal of the current Civil Service Minister, who according to various media outlets is also reportedly set to be investigated by a special commission over allegations of nepotism. Domestic commentators suggest that this underlines the governments’ commitment to improving service delivery and making officials more accountable. It “heralds a new era of transparency,” a local scholar was quoted as saying by the Arab News website.
Areas affected by the latest Royal Decrees:
Senior administrative appointees
Glenn Wepener, Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
Tel: +971 2 6110 127
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