Saudi Arabia cancelled bonus payments for state employees and cut ministers’ salaries by 20 per cent, steps that further spread the burden of shoring up public finances to a population accustomed to years of government largesse.

The government also decided to suspend wage increases for the lunar year starting next month and curbed allowances for public-sector employees, according to royal decrees and a cabinet statement published by state media.

The salaries of members of a legislative body that advises the monarchy were cut by 15 per cent.

By curbing what many Saudis had for years taken for granted, the government is signaling a determination to reduce the highest budget deficit among the world’s 20 biggest economies amid low oil prices and a lingering war in neighbouring Yemen.

The measures, however, risk deepening the kingdom’s economic slowdown by damaging consumer confidence. Saudi stocks plummeted in early trading on Tuesday.

(Independent)