(Adds comments on austerity policy by ministers)
RIYADH Oct 19 Delays in state payments to
construction firms are due to "technical reasons" and the
payments will increase in the coming period, Finance Minister
Ibrahim Alassaf said on Saudi-owned television network MBC in a
programme broadcast on Wednesday.
The construction industry has been hit hard this year by
state spending cuts, part of an austerity drive in response to
low oil prices, and by months-long delays in the government
settling its debts to contractors. Industry executives have said
billions of dollars may be involved.
Alassaf did not describe the technical problems but said
payments to companies were now "stable" and would rise. He did
not give specific numbers.
The programme was broadcast hours after the Saudi government
sold $17.5 billion of bonds, the largest emerging market debt
sale ever, in its first international bond sale. The bond offer
marked a major change of policy for the government; until last
year, it focused on cutting public debt.
Alassaf praised the government's economic plans and
austerity drive, saying it had impressed U.S. President Barack
Obama among others.
The bond issue prospectus noted that Saudi Arabia might
eventually abandon the peg of its riyal currency to the U.S.
dollar, but Alassaf said that was included for legal reasons and
the government had no intention of changing the exchange rate.
The debt issue did not include Islamic bonds; Alassaf said
the government planned to issue sukuk in future as one way to
cover its budget deficit, but did not elaborate.
Mohammad al-Tuwaijri, deputy minister of economy and
planning, told the programme that Saudi Arabia would have faced
bankruptcy in three to four years if it had not imposed
One particularly painful policy, announced last month, was
cuts in allowances for public sector employees.
Civil service minister Khalid bin Abdullah al-Araj told the
programme that after oil prices recovered, some necessary
allowances would be resumed. He did not elaborate.
(Reporting by Ali Abdelatti in Cairo and Marwa Rashad in
Riyadh; Writing by Andrew Torchia)