Saudi king gives billion-dollar cash boost to housing, jobs

Jailed Saudi debtors are pardoned amid political uprisings sweeping Arab world
POPULAR REFORMS: Saudi Arabia’s King Abdullah boosted spending on housing, social welfare and education by billions of US dollars (Getty Images)
By Bloomberg
Wed 23 Feb 2011 01:10 PM

Saudi Arabia’s King Abdullah boosted
spending on housing by SR40bn ($10.7bn), and earmarked more funds for education
and social welfare amid popular uprisings sweeping the Arab world.

The social security budget was
raised by SR1bn, according to a statement read on state-run television. King
Abdullah also ordered the creation of 1,200 jobs in supervision programs and
made permanent a 15 percent cost-of-living allowance for government employees,
according to the statement.

Saudi Arabia, the world’s largest
oil supplier, is spending more on social programs as political unrest roils the
region. Governments in Bahrain, Yemen and Libya have cracked down on activists
calling for greater job opportunities and political openness after uprisings
toppled leaders in Tunisia and Egypt.

“They are trying to enlarge the pool
of benefits for society given what is happening in the broader Middle East,”
John Sfakianakis, chief economist at Banque Saudi Fransi, said in a phone
interview from Riyadh.

Saudi Arabia’s Tadawul All Share
Index rose 1 percent to 6,337.37 at 1:59 p.m. in Riyadh, the first increase in
nine days.

King Abdullah returned to Riyadh on
Wednesday after three months abroad for medical treatment, state television
said. The 86-year-old monarch traveled to the US in November for treatment of a
back injury and went to Morocco on January 22 for physical therapy and to
recuperate, the Saudi Press Agency reported.

The king also pardoned some jailed
debtors and announced that unemployed Saudis are to get financial aid for up to
one year, according to state television.

Saudi Arabia and other Persian Gulf
oil producers are spending petrodollars to create jobs and attract investment
in contrast to the strained government resources in Egypt, Jordan and Yemen.

“The Gulf oil producers have a lot
more money to spend than their other Arab counterparts,” Jarmo Kotilaine, chief
economist at Jeddah-based National Commercial Bank, said in a telephone
interview. “The political situation is unstable in the world and the region.
The government wants to underscore its commitment to the population.”

The Saudi government announced in
August a $385bn, five-year spending plan as the kingdom tries to reduce a
jobless rate of about 40 percent for Saudis between the ages of 20 and 24. The
overall rate was 10.5 percent in 2009, according to data from the Central
Department of Statistics and Information.

Inflation in Saudi Arabia may
accelerate in the first quarter as global food prices increase further, the
kingdom’s central bank said in a quarterly report on its website. Average
inflation in the fourth quarter was 5.7 percent, the central bank said.

Protests in Egypt led to the
resignation of President Hosni Mubarak on February 11, less than a month after
Tunisian leader Zine El Abidine Ben Ali was forced into exile.

Unrest in Bahrain, which is linked
to Saudi Arabia by a 26-km (16-mile) causeway and whose capital, Manama, is
only a four-hour-drive from its Saudi counterpart, Riyadh, has in the past
spread across the border. In 1995, the Saudi government arrested a large number
of Shiites in its Eastern Province on suspicion of involvement in protests
taking place in Bahrain, according to Human Rights Watch.

In Libya, hundreds of people have been
killed in the past week in an uprising against the four-decade rule of Muammar Gaddafi.
There have also been demonstrations in Algeria, Jordan, Iraq and Morocco.

Saudi Arabia, the birthplace of
Islam, wants to develop its housing and infrastructure as it tries to diversify
its economy away from oil. The kingdom produced 8.4 million barrels of oil a
day in January, according to Bloomberg data.

 

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