The two-month salary bonus announced by Custodian of the Two Holy Mosques King Salman last week for government employees, military personnel, retirees and students is expected to benefit some 6 million citizens, say economists.
Based on an average payout of SR10,000, this means a phenomenal SR60 billion in hard cash would be in the pockets of Saudis in the next 10 days, boosting their purchasing power, they said.
Economist Osama Filali expects people to spend this money on consumer goods. The Ministry of Commerce should intervene to maintain stable prices, because pumping billions of riyals into the market can lead to inflation and a rise in prices, he told Al-Madinah newspaper.
He said chances are slim that people with low incomes would save some of this money. In contrast, those earning high salaries are likely to save or invest most of it. It was also unlikely that the money would be spent on travel and tourism because the payouts are taking place at the beginning of the second school semester, he said.
Economic researcher Abdullah Al-Alami told Arab News that the SR60 billion figure is debatable. "In economic terms we call this probable rather than possible," he said.
Al-Alami expects 6 million citizens to benefit. "However, it is difficult at this point to estimate the total figure of the two-month salary payout because the recipients include all state civilian and military personnel, all students in public education inside and outside the Kingdom, all retirees, the disabled, and other categories of beneficiaries," he said.
He said it is expected that this would lead to increased spending on goods and services over a period of time. "This will also lead to inflows into long-term investment vehicles. In general, I look at this as an increase in the rate of growth of the money supply, rather than a mere increase in money," he said.
Prominent Jeddah businessman Abdullah Dahlan said it would have a positive effect on the country's people. He said citizens should ideally not spend the money on consumer products. In addition, merchants should also not use this opportunity to increase prices, especially since the cost of imported goods have decreased by 20 percent because of lower oil prices.
"The Ministry of Commerce should tighten control on prices during this period," said Dahlan. However, spending on consumer products would likely get the lion's share of the state's largesse, he said.
Economist Farooq Al-Khateeb said the payout is a great blessing, especially for people with low incomes who have been suffering from continued price rises.
He believes that 30 percent of this money would be spent on consumer products, especially electronic gadgets such as cell phones, with housing taking 20 percent, transport 20 percent, and the rest on tourism.
Some economists have estimated that the state would pay out well over SR70 billion if grants to various sports, literary and other professional associations are taken into account.