IMF official lauds Saudi steps to control wages
International Monetary Fund’s Masood Ahmed told Al Arabiya that region needs stimulus to create new opportunities in the private sector for more jobs
Egypt is unlikely to see a jump in inflation because import prices reflect now the black market rate, Masood Ahmed, head of the International Monetary Fund’s Middle East and Central Asia department, said in an interview to Al Arabiya, in Dubai.
Regarding Saudi Arabia, he said the new measures taken by Saudi Arabia to control wages and shrink the number of government and public sector Jobs are a good start.
Ahmed said that it is natural for the economy to be affected by these new measures. Nevertheless, he encouraged the creation of new opportunities in the private sector, job creation as well as budget reforms.
Ahmed said that Saudi Arabia faces the challenge of adapting to the weak oil revenues. Consequently, it took several measures to cut governmental spending.
Ahmed believes that the actions taken by Saudi Arabia are “quite reasonable”. Nevertheless, the Kingdom’s budget suffers a shortage of 13 percent of Gross Domestic Product (GDP), which is less than last year’s percentage, but still larger than it should be.
Balancing the budget
Saudi Arabia needs to balance the budget for the next five years, Ahmed said. To do so, the Kingdom must carry out many difficult decisions to cut spending, part of which is an attempt to control the wage bill in the public sector because they constitute a large part of the total expenses.
Ahmed noted that Saudi Arabia is trying to contain the advantages associated with government jobs and reduce them. “For the time being, they are targeting high wage earners. I think this is a good start,” he said. “However, these measures need to reflect on the economy. The non-oil economy is barely growing this year, which is as expected to be in this transitional period.”
Ahmed believed that the kingdom ought to take other measures, along with budgetary reform procedures in order to spur activity in the private sector and provide the market with job openings, which is already part of the country’s policy plan.