Saudi Announces New Benefits for Soldiers and Government Workers to Offset Fiscal Reform Measures

Saudi Arabia announced new royal decrees to alleviate economic pain from new austerity measures taken as part of reforms meant to wean the Kingdom’s economy off of oil.

After a week that saw Saudis frustrated on social media over price hikes on gasoline and power, as well as the introduction of a Value Added Tax (VAT), Saudi authorities said they would spend billions on extra pay for Saudi government workers and soldiers this year, Bloomberg reports.

The handouts come at a price tag of 50 billion riyals ($13.1 billion). That price tag for the handouts exceeds the government’s own estimated earnings from the first year of the VAT at SR35 billion ($9.3 billion).

“The allocation of 50 billion riyals for this decree indicates the leadership’s concern for the people’s comfort and quality of living,” Minister of Culture and Information Awwad bin Saleh Alawwad told the Saudi-owned Al Sharq Al Awsat newspaper.

The move “sidestepped a mainstay of the prince’s plan to revamp the economy in part by weaning citizens off government largesse, indicating that consistency in fiscal policy isn’t his top priority right now,” according to Bloomberg. Crown Prince Mohammed bin Salman’s “high-speed U-turn on state handouts suggests he’s betting on the backing of ordinary citizens rather than traditional pillars of support as he consolidates power.”

Despite the backtracking on spending cuts, Saudi leaders have ensured that few exceptions are made for members of the Saudi Arabia’s large royal family. A recent royal decree by King Salman halted state payment of water and electricity bills for royal family members, causing 11 Saudi princes over the weekend to stage a sit-in protest to demand the end to the decree.

The princes were arrested at Qasr al-Hokm palace in the capital Riyadh and will be tried for disturbing the peace, according to an official statement.

“No one is above the law in Saudi Arabia. Everyone is equal and is treated the same as others,” the statement said.