Tariq A. Al-Maeena
With the falling price of oil, the principal source of the nation’s income, Saudi Arabia has adopted a financial austerity plan to survive this lean period. With the world oil surplus reaching an all-time high, this period of austerity is not expected to be of short duration. The government’s introduction of Saudi Vision 2030 aims to make the country less dependent on oil.
So far the challenges are being met in several ways. Major projects with projected costs in the billions have been shelved, strict financial reviews on existing and committed projects have intensified and certain benefits and allowances from the paychecks of the sizable number of state employees have been reduced. Many major private companies have followed the government’s move and slashed financial perks that had comfortably padded their workers’ salaries in the past.
Saudis for the most part have long been accustomed to unrestrained spending in the wake of never-ending bonuses and pay raises. But as this bounty is becoming increasing dried up, many Saudis are finding that a free spending lifestyle cannot be maintained in the current economic climate. Some have reacted sensibly, doing away with much of their previous carefree spending habits. Others have tightened their belts considerably. But there are still many others who are finding themselves somewhat lost and bewildered in the face of such changes.
A study by a financial analysis company has recently disclosed that 86 percent of the Saudis responding admitted that they were suffering from one form or the other of financial distress. Most of the financial commitments that the participants failed to fulfill were finance installments (44 percent), followed by borrowing from friends and family (34 percent) and credit card payments (22 percent).
I asked a few Saudis how the current financial climate has affected their lives. One, a middle aged engineer, said: “My company which does a lot of work with the government has reduced many of our benefits and my take home pay today has dropped by 35 percent. As I am the only income earner in the household with three growing children, you can imagine the impact. My wife and I have stopped dining out and all plans for a new car or some badly needed replacement furniture are on hold.”
Mona, a divorced schoolteacher who lives on her own with two children, said: “Everybody talks about Vision 2030, but I don’t understand it or how it is going to help me. I am sure the government has the interest of its people in mind, but for now I can feel that with the rising cost of items in the market my salary dwindles very quickly, sometimes before the next paycheck. I have cancelled visits to the hairdresser and do most of the manicuring and pedicuring myself. I have also taken to tutoring some children in my spare time to augment my income and offset the increase in expenses. But what irks me is that my greedy landlord is now telling all the tenants that he will raise the rent by 15 percent at the beginning of the New Year because of rising expenses! Where does that leave us?”
Ahmed, a doctor at the ministry of health, said: “The times have changed our thinking process when it comes to spending money. Today, I apply the ‘need versus want’ policy at home when it comes to spending. We discuss whether we need something or want something, and if it falls in the latter category, we all agree, sometimes grudgingly, to earmark it for a future date. We understand the government’s policies and have to adapt to the changes. If we fail to do so, we will find ourselves sinking under debt.”
And finally, Hussein, a retired oil executive, said: “These are challenging times. If you don’t have the money for it, don’t buy it. Unless it is a matter of life or death, do not borrow or take out a loan to get that object. Trust me, you will sleep a lot better without creditors hounding you for installments.”
It is going to take a change in how people manage their financial affairs, and the lucky ones will be those who commit themselves to altering their spending patterns so that they are in tune with today’s financial climate.
— The author can be reached at talmaeena@aol.com. Follow him on Twitter @talmaeena
