By Asma Alsharif and Souhail Karam
JEDDAH/RIYADH, Dec 24 (Reuters) - Saudi Arabia may have seen the need for fiscal prudence in its 2009 budget after an oil price slump but for many ordinary citizens, it is just another sign they were left out of the economic boom in the first place.
Saudi Arabia, which projected its first deficit in seven years for 2009, has ordered departments to stick to allocated funds and halted its aggressive public debt reduction push.
The world's biggest oil exporter said its spending focus will be on infrastructure, education and healthcare next year but the $157 billion surplus generated by the 2008 budget would be put into reserves.
For ordinary Saudis, the budget does little to address income inequalities nor their housing and job needs.
'The Saudi citizen's lifestyle continues to suffer,' said Zuhair Elamri, a public servant in the Red Sea city of Jeddah.
Saudi Arabia has used record oil revenues over the past six years to launch an ambitious development programme to meet the needs of a rapidly-growing population that, for the most part, shares little of the fabulous wealth of the ruling elite.
Economic development is one element in the kingdom's strategy to defuse militant activity which has sought to destabilise the U.S.-allied monarchy since 2003.
'The only way to ensure fairer wealth distribution is through taxes. This government does not want to tax the rich,' one analyst said on condition of anonymity.
The absolute monarchy now faces the prospect of rising unemployment as both private and public sectors struggle to create enough jobs to absorb new job seekers.
The kingdom is still struggling to fully reform its education system and adapt it to the needs of the domestic job market.
The private sector is often forced to look abroad for skilled labour and many Saudis prefer public sector jobs which are seen as higher status and guarantee fewer working hours.
SMALL WAGE INCREASE
The oil boom had only raised expectations and many ordinary Saudis still believe the government should provide generously paid jobs in the public sector.
'The problem that we have is that people want more cash now. They want to buy more things now,' said Saud El-Kably, a columnist in al-Watan newspaper.
But the 2009 budget offered little to support such hopes. The government, which projects a 65 billion riyal deficit next year, wants to cut public expenditure by about 7 percent to 475 billion riyals.
'Can I get a 10-riyal loan from the (2009) budget so I can get some fuel for my pick-up truck and attend this job interview for a building looking for a security guard?' one Internet user wrote on a popular Saudi website. (www.alaswaq.net)
Public sector employees will, however, get a 5 percent wage increase in 2009, part of a package of measures that was announced last year to cushion the impact of surging inflation.
'The 5 percent increase, for most Saudi employees, is small. The majority of Saudi citizens have a very low income,' El-Kably said.
The budget seemed to disappoint on the housing front as well, allocating only 5 billion riyals to a revolving facility to the state-owned Saudi Real Estate Development Fund.
Home ownership in Saudi Arabia stands at about 30 percent, the lowest among the oil-driven economies in the Gulf Arab region.
Soaring construction costs, land speculation, lack of bank financing and poor government assistance have aggravated a housing deficit estimated at about 1.5 million homes.
'The problem we encounter with public finances is efficiency in managing this liquidity.' said Abdulhamid al-Amri, a member of the Saudi Economic Association semi-official think tank.
'This is illustrated perfectly by difficult access to housing by the vast majority of Saudis while cash is abundant.'
(Editing by Stephen Nisbet) Keywords: ECONOMY SAUDI/BUDGET (souhail.karam@reuters.com, +966 1 463 2603; Reuters Messaging: souhail.karam.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
JEDDAH/RIYADH, Dec 24 (Reuters) - Saudi Arabia may have seen the need for fiscal prudence in its 2009 budget after an oil price slump but for many ordinary citizens, it is just another sign they were left out of the economic boom in the first place.
Saudi Arabia, which projected its first deficit in seven years for 2009, has ordered departments to stick to allocated funds and halted its aggressive public debt reduction push.
The world's biggest oil exporter said its spending focus will be on infrastructure, education and healthcare next year but the $157 billion surplus generated by the 2008 budget would be put into reserves.
For ordinary Saudis, the budget does little to address income inequalities nor their housing and job needs.
'The Saudi citizen's lifestyle continues to suffer,' said Zuhair Elamri, a public servant in the Red Sea city of Jeddah.
Saudi Arabia has used record oil revenues over the past six years to launch an ambitious development programme to meet the needs of a rapidly-growing population that, for the most part, shares little of the fabulous wealth of the ruling elite.
Economic development is one element in the kingdom's strategy to defuse militant activity which has sought to destabilise the U.S.-allied monarchy since 2003.
'The only way to ensure fairer wealth distribution is through taxes. This government does not want to tax the rich,' one analyst said on condition of anonymity.
The absolute monarchy now faces the prospect of rising unemployment as both private and public sectors struggle to create enough jobs to absorb new job seekers.
The kingdom is still struggling to fully reform its education system and adapt it to the needs of the domestic job market.
The private sector is often forced to look abroad for skilled labour and many Saudis prefer public sector jobs which are seen as higher status and guarantee fewer working hours.
SMALL WAGE INCREASE
The oil boom had only raised expectations and many ordinary Saudis still believe the government should provide generously paid jobs in the public sector.
'The problem that we have is that people want more cash now. They want to buy more things now,' said Saud El-Kably, a columnist in al-Watan newspaper.
But the 2009 budget offered little to support such hopes. The government, which projects a 65 billion riyal deficit next year, wants to cut public expenditure by about 7 percent to 475 billion riyals.
'Can I get a 10-riyal loan from the (2009) budget so I can get some fuel for my pick-up truck and attend this job interview for a building looking for a security guard?' one Internet user wrote on a popular Saudi website. (www.alaswaq.net)
Public sector employees will, however, get a 5 percent wage increase in 2009, part of a package of measures that was announced last year to cushion the impact of surging inflation.
'The 5 percent increase, for most Saudi employees, is small. The majority of Saudi citizens have a very low income,' El-Kably said.
The budget seemed to disappoint on the housing front as well, allocating only 5 billion riyals to a revolving facility to the state-owned Saudi Real Estate Development Fund.
Home ownership in Saudi Arabia stands at about 30 percent, the lowest among the oil-driven economies in the Gulf Arab region.
Soaring construction costs, land speculation, lack of bank financing and poor government assistance have aggravated a housing deficit estimated at about 1.5 million homes.
'The problem we encounter with public finances is efficiency in managing this liquidity.' said Abdulhamid al-Amri, a member of the Saudi Economic Association semi-official think tank.
'This is illustrated perfectly by difficult access to housing by the vast majority of Saudis while cash is abundant.'
(Editing by Stephen Nisbet) Keywords: ECONOMY SAUDI/BUDGET (souhail.karam@reuters.com, +966 1 463 2603; Reuters Messaging: souhail.karam.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.