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Saudi Arabia’s finance ministry the retroactive restoration of benefits to state employees will cost the government around SAR 5-6 billion, Reuters reported.
This will account for about 0.6-0.7 percent of budgeted state spending in 2017 or almost 0.2 percent of gross domestic product (GDP), which could easily be covered by contingency funds.
"This should not impact the overall budget or the budgeted deficit but we expect that it will contribute towards increased consumer spending and confidence, serving as a boost to economic growth and ensuring stability in consumer demand trends going forward," finance minister Mohammed Al-Jadaan said in a statement to the news agency.
King Salman issued directives on Wednesday to retroactively reinstate all allowances and bonuses that were canceled or suspended to civil servants and military personnel.
Al-Jadaan also said restoring bonuses and allowances retroactively from September 2016 can be absorbed within the budget’s line items.
The decision to restore bonuses will help in lifting consumption spending and boosting the economy as well as stabilizing demand, the minister added.
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