Chart 23: Illustrative paths of Saudi fiscal balance Chart 24: Illustrative paths of Saudi government debt % of GDP % of GDP 30 100 20 15 rr 10 50 0 10 25 -20 0 oS N a i<e] © S N + oO © Oo N t+ oO foe) Oo N at ico} Cc oS N wt © © oO N st ico} foe) Oo BSssseseesseaeeaeas ZSssesseseaeaegzea’d —— US$50/bbI oil - nominal spending flat —— US$50/bbl oil - nominal spending flat ——— US$50/bbl oil - modest fiscal adjustment —— US$50/bbI oil - modest fiscal adjustment —— US$50/bbI oil - ambitious fiscal adjustment ——— US$50/bbI oil - ambitious fiscal adjustment —— US$25/bbI oil - modest fiscal adjustment — US$25/bbl oil - modest fiscal adjustment —— US$25/bbl oil - ambitious fiscal adjustment —— US$25/bbI oil - ambitious fiscal adjustment Source: Haver, BofA Merrill Lynch Global Research estimates Source: Haver, BofA Merrill Lynch Global Research estimates Consumer to face mixed trends Labour policies are likely to remain a major focus for the Saudi government. Low oil prices have dented the government’s direct ability to support the consumer compared to the boom years. Furthermore, negative to flat public sector wage growth is likely to dampen income and consumption trends, although Specialized Credit Institutions (SCIs) could alleviate tightening banking sector household lending standards. The NPT suggests a focus on boosting female employment as well as increasing the cost of foreign labor relative to national labor. The latter implies a negative impact on corporate margins and profits, in the event higher labor costs are not reflected in higher consumer prices and inflation). The negative near-term cost and efficiency implications of continued labour market reforms are mitigated by the fact that eventual increase in private sector employment of higher-paid Saudi labour should prove supportive for consumption trends once the dust settles. The NTP targets increasing the cost of employment of Saudis compared to expatriates from 400 to 280. We calculate that the ratio of priv