While the price of oil is still stuck in neutral, some signs exist in Saudi Arabia that the Kingdom has weathered the worst of the storm and is ready to start taking incremental steps in the months ahead. The reason stems from a decision by the Saudi government on April 22 to bring back the allowances provided to both individuals in the military and civil servants.
It was back in September that 20 percent cuts in the salaries of its government ministers, with long-held perks by those civil servants also dialed back. The salary cut was a first for the government, with the impetus being oil prices that had dipped as low as $28 for a barrel of oil. That’s in contrast to the prices that routinely topped $100 for years, helping to fuel the Kingdom’s growth and infuse their coffers with trillions of dollars.
In an effort to carry favor with those with lower-income residents, a previous decision to change the terms on loans connected to property and for personal use was stopped. Thus, the same interest rates will be in place.
While all of the above moves angered many, it appears to have at least reduced the flow of red ink on the Saudi financial ledger. The budget that had been put in place had more positive numbers, with the subsequent rules injecting a one percent boost into the Saudi stock market the following day.
In reality, the sudden change also helped blunt the impact from protest rallies that had been scheduled in four Saudi cities. The leaders had one of their four demands met with the benefit reinstatement. Other items not addressed were the end of the pending IPO for Saudi Aramco, restored power for the religious police and the institution of a constitutional monarchy.