Honeymoon Is over for New Saudi Leader as Reform Pain Kicks in: FT
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December 7|Yamanyoon
The Saudi grumbling of unemployment is ramping up pressure on Deputy Crown Prince Mohammed bin Salman as he oversees a tough reform program intended to wean the kingdom off its dependence on oil, The Financial Times reported.
In his article, Simeon Kerr talks about the declining economy in Saudi Arabia. He interviewed an illegal taxi driver, Ahmed, who studied mechanical engineering in the US but did not find a job opportunity in his country.
Ahmed’s generation’s travails highlight the peril of reform for Prince Mohammed, who has spearheaded plans for economic diversification as the kingdom grapples with low oil prices, the report said.
Kerr quoted one fund manager as saying: “The honeymoon is indeed over. There has not been one bit of good news for the government — from the economy to the disaster in Yemen government.”
Many Saudis acknowledge the need to transform the kingdom and understand the impact of low oil prices on the economy. But voices of dissent are emerging over the means and pace of change, according to the report.
“At least everyone is in the same boat, but we could really do with the money back,” Kerr quoted Nasser, a teacher, as saying. His pay has declined by around 7 per cent to $1,400 a month due to an estimated $17bn cut in September to 3m Saudis’ public sector benefits.
The Saudi government this month set aside $27bn to settle some of its debts to private sector companies, belatedly responding to the fact that delayed payments have made it hard for contractors such as Binladin Group and Oger, large construction companies, to pay staff and creditors on time.
The government’s austerity measures have driven non-oil growth down to 0.07 per cent in the second quarter, compared with 3.5 per cent last year. The prospect of more reductions to fuel subsidies, pension cuts and a Gulf-wide sales tax from 2018 are further dimming the outlook and risks sparking more anger, the report added.
Reports that Prince Mohammed recently splashed out €500m on a superyacht has already soured opinion, Kerr noted, saying that wealthy Saudis have also been moving billions of dollars outside the country amid pessimism about its prospects, financiers say.
