Saudi to resume paying annual allowances to all state employees next year

Saudi Arabia will restore the payment of annual allowances – a key perk – to all public sector employees according to previous conditions before they were slashed to save money, local media reported on Tuesday.

Saudi officials were not immediately available for comment but local media said the increased payments would resume from the start of the new year, without elaborating.

The Saudi government, squeezed by low oil prices, slashed civil servants’ allowances in September 2016, but said in April 2017 it would restore them to stimulate economic growth after achieving a smaller-than-expected budget deficit.

In June 2017, a royal order which accompanied the announcement of Prince Mohammed bin Salman’s promotion to the post of crown prince took a further step of restoring the allowances retroactively back to September 2016.

However, analysts said the restored payments had been linked to annual appraisals but that will no longer be the case.

Government-linked newspapers Okaz and al-Watan said the latest order had come from “high up” to disburse the allowances “to all state employees as per previous conditions and procedures” that had applied before the 2016 suspension.

Another online Saudi media outlet, Sabq, said the decree had come from King Salman bin Abdulaziz after he had approved a recommendation by the financial committee chaired by his son, Crown Prince Mohammed bin Salman.

The decision comes at a time when Saudi Arabia is in the international spotlight over the disappearance of journalist Jamal Khashoggi.

Khashoggi, a US resident and leading critic of the crown prince, vanished after entering the Saudi consulate in Istanbul on October 2.

The International Monetary Fund expects the kingdom’s gross domestic product to grow by 1.9 per cent this year, partly due to higher oil output, after shrinking 0.9 per cent last year.

Growth is expected to pick up further over the medium term as economic reforms take hold and oil output increases.