Saudi's reforms are on track and people are happy
Cuts to bonuses and subsidies over two years had weighed on growth and put off investors.
Published: Sun 7 Jan 2018, 8:00 PM
Last updated: Sun 7 Jan 2018, 10:33 PM
In tough times Saudi Arabia did not shy away from embarking on reforms that may have hurt in the short term but could pay off in the future. It decided to bite the bullet and tightened its belt. In September 2016, the leadership made steep cuts in allowances and payouts to Saudi nationals and introduced austerity measures that may have hurt a bit and slowed down the economy. But times are changing for the better. Oil prices have started looking up, and a clear plan is on the table on how to shore up non-oil revenues. The introduction of value added tax, for one, will do a lot of good. The Saudi economay has a more positive outlook, and confidence levels are rising. Consequently, the government is doing all it can to ease pressure on the people. In April last year, it restored bonuses and allowances of civil servants and military personnel. And now, Riyadh has again opened its purse strings to help people make an easy transition to an age of financial innovation. The package will benefit citizens working in the civilian and military sectors, as well as pensioners and students. Salary hikes will make it easy for nationals.
Cuts to bonuses and subsidies over two years had weighed on growth and put off investors. This year, the government plans to boost spending to $293 billion to revive the economy, which is expected to expand 2.7 per cent after a contraction last year. Non-oil revenues are expected to improve further as Saudi Arabia liberalises the investment climate. Social reforms are also being speeded up. The move to allow women to drive and the opening of movie halls paint a happy picture for the kingdom. We laud these changes, and are sure more will follow. The kingdom is among the top 20 reformist countries globally, and the second among the top high-income tier in the G-20 countries in terms of implementing reforms to improve the business climate. What sets great leaders apart is their ability to make hard choices during trying times, and ease the pressure when the environment is conducive. It's about timing. The Saudi leadership now has the leverage to make changes, sweeping if needed for the larger good of the people and the economy.