(Adds calls for protests, central bank statement, background on
RIYADH, April 23 Saudi Arabia reinstated
financial allowances for civil servants and military personnel
on Saturday after better-than-expected budget figures, ending
unpopular cuts to a key perk triggered by low oil prices and
cheering the stock market.
The king issued a royal decree restoring "all allowances,
financial benefits, and bonuses" following calls for protests in
four Saudi cities over the weekend, adding a two-month salary
bonus for forces fighting in the kingdom's intervention in
The Saudi share index gained 1.0 percent on Sunday,
buoyed by expectations of a positive impact from higher
disposable incomes on consumer sectors like retail and food.
In September, Saudi Arabia cut ministers' salaries by 20
percent and scaled back perks for public sector employees in one
of the energy-rich kingdom's most drastic measures to save money
after tumbling oil prices.
The measures were the first pay cuts for government
employees, who make up about two-thirds of working Saudis, and
prompted complaints about the impact of austerity on ordinary
Under the Twitter hashtag "April 21 movement," Saudis
circulated statements last week demanding the reinstatement of
benefits, a halt to the sale of shares of state oil giant
Aramco, a constitutional monarchy and the restoration of the
powers of the religious police.
Security forces lined the streets of central Riyadh over the
weekend, although no demonstrations appeared to materialise.
IMPROVING FISCAL POSITION
The decree said the cuts had come as a response to the sharp
drop in the price of oil, which sank to a low of around $28 last
year. Prices have rebounded since late 2016, with Brent crude
now trading around $52 a barrel compared to last year's
average of $45.
Minister of State Mohammed Alsheikh said Deputy Crown Prince
Mohammed bin Salman recommended the change after
better-than-expected budgetary performance in the first quarter
"The government has conducted a review of the measures
initiated in the fall in relation to the public-sector
employees' allowances," Alsheikh said in a statement provided to
"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."
Alsheikh and other key officials highlighted trends pointing
to economic recovery.
The central bank governor said the trade deficit was
expected to drop in 2017, possibly moving into a surplus, while
the deputy economy minister said the kingdom had reduced its
deficit in the first quarter of the year by more than half, in
part because of prudent management of government spending.
"We believe this move will boost positive sentiment as
domestic demand recovers on the back of enhanced government
employees' disposable income," said Alsheikh.
In a further concession to low-income Saudis, the central
bank instructed banks to maintain the current favourable terms
of consumer and property loans, having ordered their
rescheduling in the fall to aid Saudis affected by the cuts.
Other decrees installed two of King Salman's sons in key
posts, further securing a next generation of Al Saud leadership.
Prince Khaled bin Salman, an F-15 pilot who has trained in
the United States, was made ambassador to Washington. Another
son and long-time oil policy official, Prince Abdulaziz bin
Salman, was appointed state minister for energy affairs.
The decrees also made a handful of young princes from
various branches of the Al Saud family deputy governors of the
A national security centre was established under the royal
court and Ibrahim al-Omar was named governor of the Saudi
Arabian General Investment Authority (SAGIA), an agency managing
foreign investment in the kingdom.
Further decrees replaced the information and civil service
ministers and set up a committee to investigate allegations of
abuse for the latter. The kingdom's anti-corruption body Nazaha
concluded the minister had hired his son in a post for which he
(Reporting by Ali Abdelaty, Sami Aboudi and Katie Paul; Writing
by Tom Finn; Editing by Clelia Oziel)