Sunday, October 23, 2016
Oil prices and Saudi Economy-2
The painful reforms that the Saudi government is trying to achieve will not go that smoothly although they are trying to wean their people to leaner times. They have slashed salaries of government employees who are almost 70 percent of the labor force with good salaries, less work and generous perks. They are trying to implement a plan called Vision 2030 in which they hope to achieve to transform their oil based economy into a less dependent one on oil and also more people in the private sector than they are now. Economic crisis can change so much even in an ultra conservative society like Saudi Arabia. They have for the first time gone to the International Bond Market to tap into a more than 17 billion dollar loan. Although I don’t get this move since they have foreign reserves of more than 500 billion (supposedly) but I guess that their economic situation is much worse than they are projecting to the outside world. They are also talking about a sovereign fund amount to more than 1 trillion dollars based on the selling of shares of their giant oil company Aramco. They are recently initiated a dramatic and unprecedented change in how their government employees will get paid. You see they were the only nation who was following the Islamic Calendar which is based on the moon and depending on it the month can be either 29 or 30 days so the Islamic Calendar is 11 days shorter than the Gregorian one. Not the government employees have to work 11 more days for the same or less salary. And a recent acknowledgment came from a government survey that some Saudi Employees were working 1 hour each day and getting handsome salaries.