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‘Force Majeure’ Paves Way for Salary Cuts in Saudi Arabia

Job seekers stand in line to talk with a recruiter at a booth at a job fair in Riyadh, January 29, 2012. REUTERS/Fahad Shadeed
Job seekers stand in line to talk with a recruiter at a booth at a job fair in Riyadh, January 29, 2012. REUTERS/Fahad Shadeed
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‘Force Majeure’ Paves Way for Salary Cuts in Saudi Arabia

Job seekers stand in line to talk with a recruiter at a booth at a job fair in Riyadh, January 29, 2012. REUTERS/Fahad Shadeed
Job seekers stand in line to talk with a recruiter at a booth at a job fair in Riyadh, January 29, 2012. REUTERS/Fahad Shadeed

A ministerial decision was issued in Saudi Arabia on Sunday to regulate the labor contract during exceptional circumstances caused by the coronavirus outbreak.

It stipulates reducing salaries in the private sector by 40 percent with the possibility of terminating the contracts.

The document, a copy of which was obtained by Asharq Al-Awsat, allows employers to reduce working hours and cut 40 percent of total salaries for a period of six months and provides for the termination of contracts with employees after this period.

The regulation defines force majeure as the state taking measures it deems appropriate or based on what is recommended by a competent international organization in a case or a circumstance to limit the deterioration of the situation.

It indicates that applying its provisions doesn’t stop state benefits for employers in the private sector, such as aid in paying wages for workers or exemptions from government fees.

It also stresses on not terminating contracts unless the three conditions that form a force majeure are met.

They are: Waiting six extra months for the measures taken and the resulting precautionary or preventive actions, benefiting from the implementation of the procedures related to reducing wages, annual leaves and exceptional leave, as well as proving that the establishment has suffered losses.

These developments come in line with the actions taken by Saudi Arabia to address the coronavirus pandemic and consider it a force majeure in the contracts signed with employees in the Saudi labor market.

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Egypt’s Net Foreign Assets Rise in February

Hotels, banks and offices on the Nile River in Cairo (Reuters)
Hotels, banks and offices on the Nile River in Cairo (Reuters)
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Egypt’s Net Foreign Assets Rise in February

Hotels, banks and offices on the Nile River in Cairo (Reuters)
Hotels, banks and offices on the Nile River in Cairo (Reuters)

Egypt’s net foreign assets (NFAs) increased by $1.48 billion in February, marking the second monthly rise this year following consecutive declines in the final three months of 2024, according to data released by the Central Bank of Egypt (CBE).

Based on official exchange rates provided by the CBE, calculations by Reuters showed that net foreign assets rose to the equivalent of $10.18 billion at the end of February, up from $8.70 billion in January.
A banking source attributed the increase to growing foreign investor purchases of Egyptian treasury bills. January also saw an uptick in foreign assets after the government issued $2 billion in international bonds—the country’s first dollar-denominated bond sale in four years.

Further growth in foreign assets is expected in March after the International Monetary Fund approved a $1.2 billion disbursement to Egypt, following the fourth review of its $8 billion economic reform program signed in March 2024. Last month’s IMF approval also unlocked an additional $1.3 billion under the Fund’s Resilience and Sustainability Facility.

Following Egypt’s fourth currency devaluation in March 2024, the overall net foreign asset position of Egyptian banks swung into surplus by about $14.29 billion in May—the first surplus in nearly 28 months. This turnaround came after the deficit had ballooned to nearly $29 billion by the end of January, just before the central bank’s latest reform measures.

However, the net foreign position of commercial banks alone (excluding the central bank) turned negative again in August due to renewed demand pressures for US dollars, just three months after the broader recovery.

In February, both the central bank and commercial banks recorded an increase in foreign assets. While the CBE’s foreign liabilities also grew during the month, those of commercial banks declined.