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August 26, 2005 |
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THE SAUDI COUNCIL OF MINISTERS APPROVES A DRAFT OF THE CIVIL AVIATION BILL. A ROYAL DECREE FOR A 15-PERCENT INCREASE IN SALARIES OF GOVERNMENT AND MILITARY STAFF AND PENSIONERS FROM THE SURPLUS IN THE BUDGET. THE ALLOCATION OF SR 30 BILLION FOR IMPROVING AND DEVELOPING HEALTH, EDUCATIONAL, TRANSPORT, AND WATER SERVICES AND THE INCREASE OF THE BUDGET OF THE REAL ESTATE FUND BY AN ADDITIONAL SUM OF SR 9 BILLION. THE CAPITAL OF THE INDUSTRIAL DEVELOPMENT FUND TO BE RAISED TO SR20 BILLION. The Custodian of the Two Holy Mosques King Abdullah Ibn Abdul Aziz chaired the weekly session of the Council of Ministers. At the beginning of the session, the King highlighted the Saudi efforts to expand the Two Holy Mosques and to serve pilgrims. In a statement to Saudi Press Agency following the session, Minister of Culture and Information Mr. Iyad Ibn Ameen Madani said the King praised the successive security achievements against terrorism through pre-emptive operations which led to reaching terrorists in their hiding places and to eliminating them with minimum casualties and damage. The King also praised the people's united stand against terrorism and terrorists. The Minister added that the King reiterated the need for all countries of the world to fight all forms of terrorism. He said the cabinet regretted and condemned the terrorist acts which terrorized the peaceful in Aqaba, Jordan, and Bangladesh. On the domestic field, the cabinet highlighted the importance of the King's order to increase salaries of all categories of Saudis working at governmental departments; gratuities of members of the Shoura (consultative) Council; and the maximum allocations of social insurance; the allocation of SR 30 billion in addition to what was allocated from the surplus of last year for improving and developing health, educational, transport, and water services; the increase of the budget of the Real Estate Fund by an additional sum of SR 9 billion; the Industrial Development Fund by SR13 billion; and the Credit Bank by SR 3 billion; the boost of appropriations of popular housing with a sum of SR 8 billion, bringing to SR10 billion the total allocation for this purpose; and the bolster of the Saudi exports program with the sum of SR 15 billion. All this reflects utilization of the state's capabilities and its budget surplus to meet the needs of the citizens, to create jobs, to boost investment, to achieve comprehensive and balanced development for all regions of the kingdom, and to relieve the burden of public debt. Minister Madani said the Cabinet then reviewed the domestic items on its agenda and issued the following decisions: The Cabinet approved a draft of the Civil Aviation bill which states the sovereignty and control of the Kingdom on its civil airports, aircraft and air activities and operations, the application of international agreements and treaties signed by the Kingdom, and assigns the Civil Aviation Authority to running the activities of civil aviation and air transportation. State Bank of India and Pakistan National Bank were licensed to open a branch for each in the Kingdom, and the Minister of Finance was authorized to consider further applications to open more branches of the two banks according to Saudi banking laws. The Cabinet also approved the calendar submitted by the Minister of Education for the two coming academic years 1426/1427 H. and 1427/1428 H. The two-semester first academic year starts on September 10, 2005 and ends on June 15, 2006; and the second two -semester year starts on September 9, 2006 and ends on June 20, 2007. The Cabinet approved the appointment of Abdul Rahman Ibn Abdullah Ibn Abdul Aziz Al Haizan as Deputy Director General for Financial and Administrative Affairs at the Directorate General for Water at the Ministry of Water and Electricity; Dr. Mohammed Ibn Abdullah Al-Eidi as Legal Consultant at the General Presidency of the Commission for Propagation of Virtue and Prevention of Vice. The Custodian of the Two Holy Mosques King Abdullah Ibn Abdul Aziz passed on the bulk of last year s SR98-billion budget surplus to the Saudi population. He declared a 15-percent increase in salaries of government and military staff and pensioners. Additionally, he allotted up to SR63 billion on developing civic services, health and educational facilities, and industry. The move is aimed at improving living conditions of the citizens and consolidating the national economy. King Abdullah said in a statement to the Saudi Press Agency (SPA), three weeks after succeeding the late King Fahd as Custodian of the Two Holy Mosques. In announcing the distribution of the budget surplus from high oil prices for the fiscal year 1425-1426 (2004-05), the royal decree said the remaining amount would go toward repayment of public debt estimated at a whopping SR660 billion. But analysts said the public debt is likely to be further pared down with this year s budget surplus that is expected to cross SR110 billion if record high oil prices continue up to the year-end. In the royal decree, King Abdullah also increased by 15 percent the financial remuneration of Shoura Council members. The decree specified that ministers and other senior employees would be excluded from the salary increase. "We have decided to increase by 15 percent the salaries of all Saudi government employees, both civilians and military, as well as the retired " said the decree carried by the Saudi Press Agency. The decree said the increase would be effective from the first day of the holy month of Ramadan. Saudis greeted the news with joyous celebrations. After more than 20 years of increasing living costs with no increases to the salaries of public sector employees, the generous decision by King Abdullah was widely welcomed. Also, Labor Minister Ghazi Al-Gosaibi urged private companies, in response to the royal gesture, to increase the salaries of their employees in accordance with the financial position of each firm and its salary scale. Those receiving low salaries were especially mentioned as deserving of increases. "The government will not interfere in salaries fixed by private firms and will not impose any minimum wage because these companies, which are known for national spirit and responsibility, make such interference unnecessary," Gosaibi told SPA. "I am confident that employers in the private sector will do what is necessary to spread happiness at the beginning of a new prosperous era by taking initiatives to make private sector employees as happy as their counterparts in the public sector," he said, adding that the government would appreciate such initiatives from private firms. King Abdullah also urged authorities to pay a month's basic salary inclusive of the new hike to low-paid employees in the fifth salary grade or below, including prayer leaders (imams) and other mosque staff. One month's additional salary will also be given to low-paid military officers in the rank of chief sergeant and below. The decree increased the maximum social insurance allocation for families from SR16,200 to SR28,000 annually. The decree said the salary hike was given in order to "improve the living condition of citizens and boost the national economy." The SR30 billion allocated for service projects will be spent equally during the next five years, beginning from next fiscal year. The king allocated SR7 billion for water and sewage projects, SR3 billion for primary health care projects, SR5 billion for roads, SR4 billion for school buildings, SR4.5 billion for asphalt and flood drainage projects, SR4 billion for new university and college buildings and SR2.5 billion for technical and vocational education and training projects. The decree also instructed authorities to increase the capital of the Saudi Credit Bank to SR6 billion using funds from the 2005 surplus in order to support people having limited incomes, including both civilian and military officials. The capital of the Industrial Development Fund will also be raised to SR20 billion, adding SR13 billion to support the country's industrial sector and encourage domestic and foreign investments in industrial projects. The decree called for the quick allocation of SR15 billion to the industrial export promotion program in order to provide credit service to exporters and boost industrial exports. The capital of the Real Estate Development Fund will be raised to SR9 billion, and SR8 billion will be given to low-cost housing projects in various parts of the country. "The remaining amount from the budget surplus of 2005 will be set aside for repaying public debts," the decree said. The Kingdom's public debts are estimated at about SR600 billion ($160 billion). King Abdullah has taken a series of significant decisions for the welfare and well-being of Saudi citizens since taking power on Aug. 1 after the death of King Fahd. He declared an amnesty for five Saudi activists and more than 1,000 Yemeni prisoners as well as five Libyans implicated in a plot to assassinate him in 2003 while he was crown prince. He also ordered new expansion projects worth SR4.7 billion for the Prophet's Mosque in Madinah. Last year, he allocated SR41 billion from the budget surplus of 2004 to welfare projects. Since visiting a slum in Riyadh three years ago, he has also taken a number of steps to fight poverty. Minister of Finance Dr Ibrahim Al-Assaf has reiterated the keenness of the Custodian of the two Holy Mosques King Abdullah Ibn Abdul Aziz on enabling all categories of the Saudi society, notably those of limited income, to benefit from the Royal order pertaining to increase of salaries. In a statement to the SPA and the Saudi Television, Dr Al-Assaf said the Royal order in this respect will be implemented effective 1.9.1426. 'As regards the support due to be extended to the funds and economic sectors, it will take place at the beginning of the new fiscal year', he noted. On the possibility of the increase of prices of commodities following the Royal order, Dr Al-Assaf said 'in a country with an open economy like the Kingdom of Saudi Arabia, increase of prices of commodities will be very limited'. He underlined the importance of cooperation of the Ministry of Finance and the Saud Arabian Monetary Agency (SAMA) to prevent increase of prices of commodities. Dr Al-Assaf pointed out that the Royal order pertaining to the increase of salaries comes in line with the policy of economic reform being implemented by the Saudi Government, and added 'the policy of rationalization of expenditures will continue'. Underscoring the importance of the Royal order to increase the budget of the Industrial Development Fund by SR 13 billion to SR 20 billion, Dr Al-Assaf said this development would have a positive impact on the industrial sector and would positively contribute to extending incentive Saudi Arabia's public debt, which was estimated at SR610 billion in the beginning of 2005, would be brought down to less than SR600 billion by the end of the year, Finance Minister Ibrahim Al-Assaf said, emphasizing the government's policy to reduce its internal debts as far as possible. "Last month we paid part of these debts and by the end of this year the public debts will be less than SR600 billion," the minister told Saudi Television. "We'll know about the outstanding debt only at the end of the year," he added. The Kingdom had to borrow money from Saudi banks and other financial institutions to meet huge expenditures during the Gulf War to liberate Kuwait. Al-Assaf spoke about financial allocations made by Custodian of the Two Holy Mosques King Abdullah from this year's surplus budget for various welfare projects in education, health, housing and other sectors. He hoped that the increase of the Industrial Development Fund's capital to SR20 billion would boost both domestic and foreign investments in the country. Although many including economists fear the increase in salary and public spending would shoot up prices of consumer goods and services, Al-Assaf said the increase of prices would be "very limited" in an open economy like the Kingdom. He called for monitoring the market to prevent exploitation of the situation. Abdullah Al-Maghlouth, an economist, said the salary hike would encourage companies and industries to increase prices of their products and services, causing inflation. He urged the government to lower charges of electricity, water, petrol and gas to reduce the burden on the public. Public employees in the Kingdom were extremely happy when they heard the news. "Mabrook" (congratulations) was heard throughout the day as people greeted each other in the streets and offices. The timing was also appreciated as the increase will be implemented in Ramadan and at the beginning of the school year when parents are burdened with extra school expenses. "We thank the king for his great sense of humanity for the needs of the people, especially government employees, and pray that God will reward him for this generous gesture," said an employee at the Girls' Education Administration. She echoed the sentiments of her colleagues who expressed their gratitude to the king. "This increase will help many people, especially those with low salaries and those who work on contractual basis who are also included in the raise," said one teacher. Another employee said that even though this raise was expected, it was still a wonderful surprise. "Everyone in the office is celebrating and already planning how to benefit from the extra money. The raise will motivate employees to work harder and better and we hope to see more raises," he said. Retirees are particularly happy with the royal gesture because they have been complaining for years that their pensions were insufficient to meet their daily living expenses. Some of the retirees have a pension of SR2,000 and their whole family depends on it, especially if most of their children are unemployed. "This is great news for retirees and their families; we have been asking for it for a long time," said Roqaya, a widow and mother of two. "The old pension was not enough and the king's gesture has removed my worries," said Malika Othman Nazer, wife of the late Lt. Gen. Mohammed Baeshen. As for retired university staff, Amina Al-Sabban says the increase in pensions will make a big difference for those who retired 10 or 20 years ago because, since then the living expenses have increased while the pension has remained the same. This was a real problem if the individuals had a large family. The vice president of the Women's Welfare Society, Nisreen Al-Idreesi, said that this generous act by the king would relieve some of the burdens on poor families. "We support families with an income of SR1,500 a month and less and many of them have families of 10 members, so this increase will help them a lot and make them less reliant on us and this allows us to support other poor families," she said. Bakur Quota, a retired university professor, said that there had been rumors about a raise for low-salaried employees only but he was glad that the raise includes everyone because each employee has served his country honestly and continues to do so. The increase will help improve their living conditions." Others such as Abu Firas, an employee of Saudi Arabian Airlines whose employees are included in the increase, said the problem is that with the increase in income, there will be an increase in spending. "We are only going to spend more. We don't know how to save or invest our money. Also, I expect many merchants and property owners to increase prices and rents taking advantage of the increase so we might not even benefit from it," he added. Economist Yassin Al-Jifri said some experts might worry that the salary increase will have a negative effect as it will lead to inflation but he does not believe that will happen because the increase is reasonable. "The increase is reasonable and will offset the previous inflations and because it is limited, I don't expect there will be an increase in prices," he said. The 15 percent salary increase is a good move because the money is coming from the oil revenue, rather from printed money, said Dr. Muhammad Ramadi, an economist and professor at the King Fahd University of Petroleum and Minerals (KFUPM). The rise would probably most impact the lower to middle-income families who normally tend to spend more rather than save. Ramadi said the salary increase would have a positive and non-inflationary impact, though it (the increase) is not significant because there is already that low-salary level per capita. It is not going to be a huge, huge impact but certainly it will help people in terms of increased consumption. Specifically addressing the plight of the poor, the decree also announced a maximum family social security payment of SR28,000, up from SR16,200. Additionally, limited-income Saudis - including government and military staff - will benefit by an increase of the capital of the Credit Bank by SR3 billion to SR6 billion. The handout also saw a SR9 billion increase in the budget of the Real Estate Development Fund. Besides, an additional sum of SR8 billion was allotted for housing for Saudis in various regions of the Kingdom. This five-year program, that is part of a larger war on poverty launched in 2003 across the country, will now have a total allocation of SR10 billion. Major allocations were made to develop civic services and educational facilities. A total of SR30 billion was earmarked for implementing the second phase of an extended program to develop civic services. The allocations will be equally divided across five fiscal years, effective the next fiscal year 1426-1427 (2005-06). |
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