In one of the most drastic measures yet by the energy-rich kingdom to save money at a time of low oil prices, Saudi Arabia will cut ministers’ salaries by 20 percent and scale back financial perks for public sector employees.

The first pay cuts for government employees, who make up about two-thirds of working Saudis, is constituted by the measures that were disclosed in a cabinet statement and royal decree broadcast on state-run Ekhbariya TV on Monday.

“The cabinet has decided to stop and cancel some bonuses and financial benefits,” read a line of text on Ekhbariya. A minister read out a list of cuts in various grades in the civil service in front of a gathering that included Ministers and royals, including King Salman.

The energy-rich Gulf Arab states have been pushed to rein in lavish public spending by the plunge in oil prices since mid-2014.

Saudi Arabia was forced to find new savings and ways to raise money after it racked up a record budget deficit of nearly $100 billion last year.

The cut in ministers’ pay was announced by a royal decree that was read directly after the broadcast on the TV channel. Shoura Council members will have to undergo a cut by 15 percent on housing and car allowances.

While annual leave may no longer exceed 30 days, overtime bonuses were curbed at between 25 and 50 percent of basic salaries. The only exception is available for the troops that are involved in combat along the southern border and abroad. The troops are part of an 18-month military intervention led by Saudi Arabia in neighbouring Yemen.

“It’s one more economic measure to balance spending. Of course people don’t like it, but it’s a sign of the times,” Saudi analyst and editor of Al Arab News Jamal Khashoggi said.

“Probably the teachers and many others will be affected by it. It shows why it’s important for the private sector and Saudi GDP to diversify,” he told Reuters.

Addiction to oil, on which the government depends for the overwhelming share of its revenues, is being planned to be weaned under a reform plan that was unveiled by Saudi Arabia this year.

Jumpstarting the private sector, providing jobs for a growing population and collecting more non-oil revenue are the aims of the so-called “Vision 2030” initiative.

In a series of recent measures to boost revenue the cuts to public sector perks, effective Oct 1, are the stiffest.

Fee for a range of government services and fines that include charges and fines for some traffic violations such as “drifting,” or the reckless skidding of cars at high speed — a pastime for some Saudi youth were raised last month after a cabinet approval.

The cabinet sacked the minister responsible following a public outcry over how the new water tariffs were applied after it cut subsidies for power and water last December.

The water price increases had not been implemented as planned, the Deputy Crown Prince Mohammed bin Salman, who is responsible for the sweeping economic reforms, was quoted as saying.

(Adapted from CNBC)

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