Saudi finance minister is sacked by royal decree, as kingdom adapts to lower oil revenue
Saudi Arabia on Monday sacked its veteran finance minister as the kingdom undergoes a major economic restructuring because of lower oil revenues.
Ibrahim al-Assaf “has been removed from his position”, said a royal decree, one of a series of orders from King Salman, published by the official SPA news agency.
Assaf was replaced by Mohammed Aljadaan, head of the Capital Market Authority which regulates the stock market.
A foreign diplomat had said weeks ago there was talk of changing the finance minister, who is 67 years old and had held the post for 20 years.
Assaf, who has a doctorate in economics, was reassigned as a minister of state and will remain in cabinet.
Aljadaan, a lawyer, had led the Capital Market Authority since January last year.
No replacement for him at the market regulator was immediately named.
Since 2014, global oil prices have collapsed by about half, accelerating Saudi efforts to move away from petroleum which still accounts for the bulk of government income.
The world’s biggest oil exporter is projecting a budget deficit of US$87 billion this year.
It has taken a series of austerity measures, including subsidy cuts, reductions in cabinet ministers’ salaries and delays in major projects.
Earlier this year, Deputy Crown Prince Mohammed bin Salman, 31, who heads the main economic coordinating body, announced a wide-ranging plan to move the economy away from oil.
Assaf last week said Saudi Arabia’s financial position remains strong despite sinking oil prices, although there is “some pressure” on bank liquidity.
“We have been able to maintain a good position in public finances,” Assaf said.
Among measures to cover the fiscal gap, Riyadh has drawn on its foreign reserves and issued domestic bonds before Assaf, two weeks ago, supervised the kingdom’s first international bond offering.
It raised US$17.5 billion, reflecting strong global interest.
Official figures show the kingdom’s reserves declined to $562 billion in August from US$732 billion at the end of 2014.
Oil prices are hovering around US$50 per barrel after hitting a 10-year low of less than US$30 in January, down from a peak of more than US$100 in mid-2014.
The finance portfolio was the only cabinet position changed under the royal decrees which also replaced the heads of several agencies including the Saudi Food and Drug Authority.
Aljadaan’s appointment reflects the reform direction that Saudi Arabia is moving toward with “wide support” for a “younger generation of bureaucrats,” said Fahad Nazer, who worked at the Saudi embassy in Washington and is now a political analyst at JTG Inc. in Virginia.
“Most of these senior positions are going to younger, less experienced people, but people who are still very-well qualified and energetic,” he said in a phone interview.
The set of royal orders issued Monday evening local time also replaced the public transport chief and the governor of the Saline Water Conversion Corporation, among other officials.
Additional reporting by Bloomberg