Saudi Arabia will clear all delayed payments to private sector companies by the end of the year, bringing to an end a policy that slowed growth in Arab world’s biggest economy.
The Council of Economic and Development Affairs approved the plan at a meeting Monday night, the official Saudi Press Agency reported. The council authorized payments to begin immediately without giving further details on the size of the arrears, the news service said.
The world’s biggest oil exporter delayed payments to contractors last year as it sought to rein in a budget deficit that reached about 15 percent of gross domestic product. This coincided with a package of austerity measures, including cuts to public sector wages and energy subsidies that curtailed non-oil economic growth in the last quarter of 2015 and the first this year.
Economic growth is expected to slow to 1.3 percent this year, according to a Bloomberg survey of economists — the lowest level since the 2009 global recession. Saudi Arabia raised $17.5 billion from a bond issue last month, the largest from an emerging-market nation.
As government payments slowed to construction companies like Saudi Oger and the Saudi BinLadin Group, thousands of foreign laborers who helped keep the economy growing with low-paying jobs were left stranded in labor camps. Nearly 16,000 from India and Pakistan were abandoned, their governments said in August.
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