RIYADH — A number of economic experts have warned that a lack of savings by Saudis might subsequently have an adverse effect on the national economy. The experts indicated that about 85 percent of the Saudi families are not familiar with the culture of saving and spend most of their income on consumption. The experts were unanimous that many families liquidate their assets or resort to loans to cover their expenses. They said society is suffering from high rates of consumption at the expense of savings. “About 85 percent of the Saudi families do not give much attention to saving, especially those who are entirely depending on their monthly incomes,” Fadl Al-Bouainain, an economist, told Al-Hayat newspaper. He said that when they have an increase in their income, a lot of people will consume these increases without turning them into savings. “This is a common trend in Saudi Arabia,” he said. Bouainain said a major default in the Saudi economy is that it does not depend on the savings of the individuals. “Consumption supersedes everything else, thus affecting the economic growth of the country,” he said. He pointed out that many Saudi families face financial crises every month not because of their low income but due to the lack of financial planning. He said many families and individuals depend on loans, which put them under constant financial pressures. According to Bouainain, the economic strength of the advanced countries are measured by the rate of savings of their people. “This is an indicator of their comfortable life and their sound financial planning,” he said. Bouainain said the lack of saving has prevented many Saudis from buying shares offered by many companies for public subscription. “Only about 15 percent of the Saudis are able to purchase shares offered for public subscription,” he said. Youssef Al-Zamel, another economic expert, agreed. “The Saudi family spends 10 percent more than their actual income and the gap is covered by loans,” he said. He said most of the Saudis are unable to save because of the high prices, the rising costs of living and a lack of the culture of saving. Fahd Bin Jumaa, a Shoura Council member, divided Saudi society into three categories income-wise. The low-income category includes those with a monthly income of SR3,000-5,000, the second category is those who earns from SR5,000 to SR15,000 a month and those with a monthly income above SR15,000 are grouped into the high-income category. He said as long as many Saudis do not have their own private homes and that they have to repay their consumer loans, they will not be able to save from their monthly salaries. “This has created the ‘Live Your Day' culture,” he said. Jumaa said the “Live Your Day Culture” has made many people shy away from looking for a second job to supplement their income. “The important thing is to correct the behavior of the employee. He should not be content with his monthly salary but has to look for another source of income. He should also plan his monthly expenditure so as not to enter into the whirlpool of loans,” he said. Jumaa doubted the recent World Bank figures saying the average monthly income of a Saudi was SR6,800. “There are no official statistics on the issue by the Central Department of Statistics and Information,” he said.
