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Saudi Arabia Says Will Clear Delayed Payments by Yearend

Saudi Arabia Says Will Clear Delayed Payments by YearendSaudi Arabia Says Will Clear Delayed Payments by Yearend

Saudi Arabia will clear all delayed payments to private businesses by the end of the year as it concludes a review of government projects that has saved the kingdom “tens of billions of riyals.”

The Council of Economic and Development Affairs approved the plan to settle the delayed payments at a meeting Monday night, the official Saudi Press Agency reported. The council authorized payments to begin immediately, the news service said, without giving further details on the size of the arrears, Bloomberg reported.

Saudi Arabia has also reviewed hundreds of contracts, rescheduling some and amending others. The government stopped plans to award projects valued at one trillion riyals ($267 billion), a level of spending that “was not commensurate to the economic and developmental return,” it said.

The world’s biggest oil exporter delayed payments to contractors last year as it sought to rein in a budget deficit that reached about 15% of gross domestic product. Authorities have also rolled out a package of austerity measures, including cuts to public sector wages and energy subsidies. Economic growth is expected to slow to 1.3% this year, according to a Bloomberg survey of economists—the lowest level since the 2009 global recession.

As government payments slowed to construction companies like Saudi Oger and the Saudi BinLadin Group, thousands of foreign laborers who helped keep the economy growing with low-paying jobs were left stranded in labor camps. Nearly 16,000 from India and Pakistan were abandoned, their governments said in August.

The commitment to settle arrears to contractors is “important”, said Mohammed Al Suwayed, the Riyadh-based head of capital and money markets at Adeem Capital.

“Now that it’s official, of course it’s going to put the markets to ease, and going to increase trading hopefully,” he said.

The benchmark Tadawul All Share Index gained 0.9% in Riyadh, trimming this year’s loss to 9.6%.

The announcement comes after the kingdom raised $17.5 billion from a bond issue last month, the largest from an emerging-market nation.

In latest reports coming out of Saudi Arabia, the country’s households want the salaries of their house­help slashed by half, in the face of shrinking standard of living in that Middle Eastern country brought about by persistent low prices of oil and a glut in the world market.

Recruitment consultant Manny Geslani said, Saudi women are complaining of the high wages being paid to Filipina house-help, who receive a monthly salary of 1,500 Saudi riyals, the equivalent of $400, under a bilateral labor agreement forged in 2013 by then-Labor Secretary Rosalinda D. Baldoz.

 

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