Saudi Arabia’s central bank SAMA asked local banks to to reschedule property loans of clients affected by the recent cut in government spending, Reuters reported on Tuesday.
In September, the Saudi government reduced allowances for public sector employees, with economists estimating that this would reduce the income of many by about 20%. Two thirds of the Saudi population is employed in the public sector.
At the end of September, the central bank had already asked banks to reschedule consumer loans. While outstanding real estate loans amounted to SAR 108.2 bn at the end of June, consumer loans were three times as high.
Saudi Arabia’s economy and its state budget has come under immense pressure due to a drop in oil prices, resulting in austerity measures, including cuts in state spending on its employees.