The Kingdom of Saudi Arabia is slated to embark on a
multi-billion dollar project to replace broader energy subsidies with a set of
financial supports for some of the country’s most vulnerable citizens.
The program, which Arabic-language newspapers have referred
to as the Citizen Account, will put the equivalent of over $6 billion into
the 2017 budget to help subsidize water and energy utility costs for
lower-income Saudis.
A Feb.
26 report on Zawya.com by Nada al Rifai describes the program as “a move
seen as seeking to deflect public discontent and to ensure a more equitable
distribution of wealth.”
Rifai notes that as oil revenues have started to dry up, KSA
has shuttered some of its more indulgent oil and gas subsidies, which are not
income-dependent, and that instituting a more targeted program won’t be
universally popular.
However, the Saudi government sees the large spending project
as a way to genuinely support low-income families who need financial help the
most. Rifai writes:
“By directing financial help to those that most need it
rather than providing unnecessary energy subsidies to wealthy citizens, the
government can reallocate the money saved to help develop the kingdom’s non-oil
sectors, as per the National Transformation Program, which aims to reduce
reliance on the hydrocarbon sector and expand the private sector.”
An article by Sharif M. Taha in Arab News Jan. 9
identifies major beneficiaries of the program as: “Saudi families, Saudi
independent individuals, beneficiaries of social security, Saudi mothers
married to foreigners, and holders of transport cards.”
Taha’s article reveals that the Saudi Ministry of Labor and
Social Development has put out a guide to help residents access the funds
available through the program. Taha also reports the Citizen Account will be
linked to other forms of assistance, like the Housing Ministry’s “Ejar Program.”
The Gulf News Journal spoke on March 2 with Mike Toney about the Citizen
Account program. Toney holds a master’s degree in international
business and spent time in the Gulf region as a member of the U.S. military.
“There’s a tradition that involves protecting women and
children, and vulnerable populations.” Toney said, noting that such a program
would likely resonate with elements of Islamic culture. “There would be
religious reasons to protect these people.”
Also, he said, although some Saudi citizens may get along
fine without any subsidies, others are deeply in need.
“It’s an oil-rich country,” Toney said, “but it’s also a
country that has economic disparity. It’s not surprising that KSA leaders would
look to redistribute the wealth a little bit.”
Toney also mentioned that changes in oil prices, which are
so rapidly and profoundly changing many Gulf societies, are probably part
of the backdrop forming the context of the program’s emergence.
For example, he said, it’s likely that many subsidy
recipients are going to be Aramco workers or workers at other oil-based jobs
who were laid off when oil prices declined.
“This could be a secondary or tertiary effect of oil prices
falling,” Toney said.
