Saudi Arabia is ordering ministries to cut their spending on contracts by at least 5 per cent in a fresh austerity drive, according to reports.
The move could further slow economic growth in the kingdom and hurt the construction industry.
The central government has instructed all ministries and state bodies to reduce their outstanding contracts signed to support their operations as well as construction contracts included in the 2016 state budget, by “not less than 5 per cent of remaining obligations”, according to a document seen by Reuters.
It said the measures were proposed by the minister of economy to rationalise spending and increase efficiency.
Ministries are left to decide how to revise contracts to meet the required savings with no mention of how to renegotiate with suppliers, the newswire reported.
Another clause forbids ministries and government bodies from signing contracts without ministry of finance approval. Previously small contracts could be agreed without the ministry’s consent.
The Saudi government has been looking to reduce spending after posting a budget deficit of nearly $100bn last year.
By Robert Anderson
