Secret memo reveals King Salman imposing unprecedented austerity on public-sector budget as oil price languishes at under half of break-even level
The Saudi government has banned official purchases of cars and furniture and slashed travel budgets and infrastructure spending as it faces its gravest fiscal crisis for years because of low oil prices, according to leaked internal government documents.
Secret Saudi policy memos issued by King Salman to the finance minister detail the new economic austerity measures to be implemented across all government ministries. Saudi public finances have been depleted this year by tumbling oil prices to such an extent that the kingdom is expected to run a deficit of at least 20% of GDP in 2015.
One letter marked “Highly Confidential and Most Urgent” dated 14-12-1436 (28 September 2015 in the Islamic calendar) gives strict instructions to stop any new projects, end the purchases of any new vehicles, furniture or other equipment, freeze all appointments and promotions, stop compensation payments for property, and halt any new rental agreements.
Expenditure from existing budgets and projects during the fourth quarter are forbidden to exceed 25% of the agreed totals, and expenditure on travel and other business-related expenses are not to exceed 15% of the original budget.
The speed at which oil revenue is brought into the finance ministry’s coffers must also be increased, and the letter says the king’s orders must be implemented immediately, provided no outstanding contractual rights are affected. The Guardian has been unable to authenticate the documents, but experts say they appear to be genuine.
The oil crunch – prices have halved to barely $50 a barrel over the past two years – has coincided with an expensive war in neighbouring Yemen and some sudden largesse decreed by Salman when he succeeded his late half-brother Abdullah as the new king in January.
Read more:
http://www.theguardian.com/world/2015/oct/08/no-more-new-cars-furniture-king-oil-slump-forces-cuts-saudi-arabia
