Since Salman took the throne last month, he has swiftly taken charge, abolishing government bodies and firing ministers. But no measure has caused as much buzz as the giant payouts he ordered to a large chunk of the Saudi population.
RIYADH, Saudi Arabia — European leaders are still battling over austerity. In Washington, Congress is gearing up for another fight over the budget. But in Saudi Arabia, there are no such troubles when you are king — and you just dole out billions and billions of dollars to ordinary Saudis by royal decree.
Not surprisingly, Saudis are very happy with their new monarch, King Salman.
“It is party time for Saudi Arabia right now,” said John Sfakianakis, the Riyadh-based Middle East director of the Ashmore Group, an investment company, who estimates that the king’s post-coronation giveaway will ultimately cost more than $32 billion.
That is a lot of cash — more, for example, than the annual budget for Nigeria, which has Africa’s largest economy.
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Since Salman ascended to the throne of the wealthy Arab kingdom last month, he has swiftly taken charge, abolishing government bodies and firing ministers. But no measure has caused as much buzz as the giant payouts he ordered to a large chunk of the Saudi population.
These included grants to professional associations, literary and sports clubs; investments in water and electricity; and bonuses worth two months of salary to all government employees, soldiers, pensioners and students on government stipends at home and abroad. Some companies followed suit with comparable bonuses for their Saudi employees, putting another few billion dollars into people’s pockets.
Some of the government spending will come over years, but most will hit the Saudi market this month, including the bonuses. About 3 million of Saudi Arabia’s 5 ½ million-person workforce are employed by the government, Sfakianakis said.
So, for the moment, there is little talk about human-rights abuses or political overhaul. Saudis are spending. Some have treated themselves to new cellphones, handbags and trips abroad. They have paid off debts, given to charity and bought gold necklaces for their mothers. Some men have set aside money to marry a first, second or third wife. One was so pleased that he showered his infant son with crisp bills.
“The first thing I did was go and check my storerooms,” said Abdulrahman Alsanidi, who owns a camping-supply store in Buraida, north of Riyadh. He expected a 30 percent jump in sales.
Saudi rulers have long used the wealth that comes from being the world’s top oil exporter to lavish benefits on their people, and many Saudis describe royal largesse as part of a familylike social contract between rulers and loyal citizens.
But the new spending comes amid change and uncertainty for the kingdom. Salman took the throne after the death of King Abdullah and announced the bonuses as a goodwill gesture to his people.
Because about 90 percent of government income comes from oil, the drop in world prices has reduced state revenue by about 20 percent, said Rakan Alsheikh, a research analyst at Jadwa Investment. His company projected that the government would run a record deficit of $44.5 billion in 2015. The new spending could increase that deficit to $67.2 billion, or 9 percent of gross domestic product, Alsheikh said.
Those worries seem far from the SUV-clogged streets of the Saudi capital, Riyadh, where gas costs 45 cents a gallon because of state subsidies, and people are used to repaying government generosity with public displays of fealty.
“We pledge allegiance to you, hearing and obeying,” declare billboards for phone and construction companies.
Average government salaries are about $2,400 a month, with some workers earning additional allowances for transportation, housing, overtime and the holy month of Ramadan. Student stipends are less, while employees with years of service can earn $4,800 a month or more, Sfakianakis said.
The importance of government patronage is clearer outside the cities, where nongovernment employment for Saudis is scarce.
Sitting in his salon in the village of Butain north of Riyadh, Prince Moteb bin Fahed bin Farhan al-Saud asked the 20 or so men visiting who had received a two-month bonus. All raised their hands.
“Now we are asking that the king forgive all the citizen’s debts,” said one visitor, Mohammed al-Sahli, adding that his bonus would help him marry a third wife.
Over the years, government money had transformed the village. While its residents once mostly farmed and raised animals, few bother to anymore. Electricity and phone service arrived in the 1980s. Now, there is power in every home and 4G data coverage throughout. Every weekday, a bus gives dozens of female students a free ride to the university in town, which is also free, Moteb said.
Driving through town, Moteb pointed to construction crews building tree-lined roads and roundabouts and a pedestrian area with swing sets and picnic tables.
Some of the village’s main employers are downtown: the local office of the prince of Qassim province; the Commission for the Promotion of Virtue and the Prevention of Vice, which monitors public morals; and a new fire station with shiny new engines.
“The government treats us very well here,” said Abdullah al-Sahli, head of the local government office, who said he had distributed his bonus to his wife and children.
His son Moteb, 6, said he already had two iPads, so he spent the money on a new toy Jeep. “We have nothing to complain about,” al-Sahli said.