Saudi Arabia’s King Abdullah bin Abdulaziz al-Saud has announced a huge package of state support measures estimated to cost SR135bn ($36bn) as he tries to prevent a wave of protest that has spread throughout the Arab world from hitting the GCC’s largest country.

The new handouts were announced within hours of the king returning to Riyadh after three months abroad for medical treatment.

The SR135bn spending plan is spread across 19 orders issued by the king, which include the creation of a one year unemployment benefit payment for jobless Saudis, writing off loans for the deceased and prisoners, admission of all Saudis studying abroad into a state scholarship scheme, and making permanent a 15 per cent increase in government salaries, originally introduced to compensate for rising inflation. The measures also included efforts to improve affordable housing.

Unemployment among Saudis is at 10.5 per cent, but for under 30s was around 27 per cent at the end of 2009.

The initiatives announced by the king come as protesters in Saudi Arabia are trying to organise a day of rage for 11 March inspired by the protests in Egypt, Tunisia, Bahrain and Libya. Organised by social media services such as Facebook and Twitter, locals are saying that state handouts are no longer enough to placate them, and are calling for constitutional reform, freedom of expression, and more rights for women.

“The measures taken this week are on the right track toward addressing economic desires of Saudi citizens,” says John Sfakianakis, chief economist at the local Banque Saudi Fransi. “However the government will need to continue gauging popular sentiment as citizens across the region seek political reforms and development of civil society institutions.”

King Abdullah was greeted on his return to Saudi Arabia by Bahrain’s King Hamad bin Isa al-Khalifa, who has recently asked his son crown prince Sheikh Salman bin Hamad bin Isa al-Khalifa to start a dialogue with protesters in Bahrain to bring to an end violent clashes with police and the military that left seven civilians dead.