web_riyadh_istock-185927876.jpg

Riyadh, the capital of Saudi Arabia.

King Salman bin Abulaziz Al Saud reduced the cuts – the first ever to hit civil servants in Saudi Arabia – in a series of royal orders issued at the weekend.

The official Saudi news agency said the decision was intended to “comfort” Saudi citizens. Around two thirds of the working population are employed in the public sector and were affected by the cuts.

All “allowances, privileges and financial premiums given to civil and military state officials previously cancelled, amended or frozen” would be reinstated.

Riyadh was forced to slash pay and perks for public sector employees last year as a crash in commodity prices put the oil-rich nation’s formerly lavish spending out of reach. The kingdom ran up a record budget deficit of almost $98bn in 2015.

Ministerial salaries were cut by 20%, alongside reductions to housing and car allowances and overtime bonuses, while annual leave was capped at 30 days.

But the sudden and wide-reaching cuts proved unpopular with working Saudis, who were used to significant employment benefits. There were calls for protests in four cities over the weekend to demand the austerity measure be rolled back.

While no demonstrations materialised, Saudi royals and the government heeded the request. The country’s crown prince, Mohammed bin Salman, reportedly recommended the move in light of a better-than-expected performance for the public finances in the first quarter of 2017.

In a series of separate decrees, Riyadh also gave frontline fighters in the kingdom’s intervention in Yemen a two-month salary bonus, instructed banks to maintain favourable lending terms and announced a number of job appointments.

After a two-year lull, an agreement between the world’s major oil producers to limit production appears to be helping prices stabilise, although they remain depressed.

Across the Gulf region, once-wealthy states are still struggling to recover the revenues and spending power they previously enjoyed.