Royal Handouts Cheer Saudis But Show Struggle to Revamp Economy

King Salman, in a series of royal orders early on Saturday, restored an annual pay raise for Saudi civil servants, suspended as part of attempts to rein in a hefty public-sector wage bill. He ordered a 5,000-riyal ($1,333) bonus for soldiers fighting in Yemen and granted Saudis working for the state an extra 1,000 riyals a month as a "cost of living" allowance for a year. The government will also pay part of the newly introduced VAT.

The measures will likely be cheered by Saudis who took to social media and television to criticize surging prices and the implementation of a 5 percent VAT on a wide array of products as of Jan. 1. Yet they also show how the kingdom's rulers are struggling to find a balance between the need to avoid unrest and take the difficult steps needed to reduce what policy makers and economists see as an unsustainable reliance on oil revenue.