RIYADH, Sept 29 (Reuters) - Saudi Arabia’s central bank has asked local banks to reschedule consumer loans after the government cut bonuses and other financial perks for public sector workers, Okaz newspaper reported on Thursday.
The cabinet announced this week that it would cut ministers’ salaries by 20 percent and reduce a range of allowances for public employees to help curb a huge budget deficit caused by low oil prices.
Allowances account for as much as 30 percent of many Saudis’ income, so the measures may have a significant impact on consumer spending. In addition, the government said it would base salary payments on the Western calendar rather than the Islamic calendar; since the latter is about 11 days shorter, this is expected to reduce income further.
“The Saudi Arabian Monetary Agency has obliged local banks to reschedule consumer loans for employees whose salaries went down after the cancellation of a number of allowances and bonuses,” Okaz said without naming its sources.
Central bank officials were not available to comment on the report.
Under banking rules, monthly installments on consumer loans in Saudi Arabia must not exceed a third of a borrower’s total salary. Outstanding consumer loans totalled 343 billion riyals ($91.5 billion) at the end of June, central bank data shows. (Reporting by Marwa Rashad; Editing by Andrew Torchia)