December 14, 2011Saudi King makes minor cabinet reshuffle; no major shift in financial policy seen
Saudi King Abdullah bin Abdul Aziz made a minor reshuffle in the cabinet of the oil-rich kingdom late on Tuesday, the first since 2009, state media reported.
The main ministries of defense, interior and foreign affairs, held by top members of the royal family, remain unchanged, as does the strategic energy ministry.
Analysts said some of the changes had been expected and do not signal a major shift in financial and monetary policy of the world’s top oil exporter, but could indicate a move towards market liberalization, according to Reporters.
In the reshuffle, planning and economy minister Khaled al-Gosaibi was replaced by Mohammed al-Jasser, who had served since February 2009 as governor of the Saudi Arabian Monetary Agency (SAMA), or the central bank.
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Fahed al-Mubarak succeeded Jasser.
The king also removed the minister of commerce and industry, Abdullah Zainel, and replaced him with Tawfeeq al-Rabeeah, while the minister of hajj Fuad al-Farsi was replaced by Bandar al-Hajjar.
Mohammed al-Fayez, who served as civil service minister, was replaced by Abdullah al-Barrak.
The current defense minister, Prince Salman bin Abdul Aziz, a younger half-brother of the king, took office in November, following the death of his brother, the then crown prince Sultan who held the portfolio for decades.
The king also replaced the deputy head of the Shura Council, a consultative body that advises the government on legislative matters.
The current cabinet was formed in March 2007, and should have been replaced in spring this year after serving its four-year term.
In February 2009, the king made limited changes to the cabinet, and appointed the first woman to the post of deputy education minister.
The king holds the post of prime minister.
Saudi Arabia's central bank does not run a fully independent monetary policy as it needs to keep interest rates close to U.S. benchmarks due to its currency peg to the dollar to prevent unwanted capital flows. That makes fiscal policy a key tool to steer the oil-reliant economy.
Monica Malik, chief economist at EFG-Hermes in Dubai, told Reuters that appointing a new central bank governor with a background in investment banking and the stock market could be an indication of Saudi Arabia’s gradual shift toward development of capital markets and liberalization.
“We expect monetary policy, including the peg to the U.S. dollar, to continue following this government reshuffle,” Malik said.
“We also believe that current economic policy will be maintained with focus on economic liberalization, improving investment environment and job creation,” she added.
Saudi Arabia, which has been considering a wider opening of its stock market for several years, has recently indicated details of the proposed framework of foreign ownership, although the timeframe is yet to be finalized.
Hossein Shobokshi, a Saudi columnist, said the new appointments represented a move toward a new generation of Saudi officials: “They are young, educated and proven professionals.”
The kingdom, the only Middle East member of the Group of 20 developed and emerging nations, has earmarked more than $400 billion over five years from 2008 on infrastructure projects. It also plans to boost spending by an estimated $110 billion, or 19 percent of economic output, over several years.
In October, King Abdullah named Interior Minister Prince Nayef bin Abdul Aziz, a half brother of King Abdullah, as new crown prince following the death of Prince Sultan.
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