Much has been written over the past year and a half on the economic reforms in Saudi Arabia.

Recognising the need to limit its dependence on oil revenues, the kingdom’s Vision 2030 and National Transformation Programme documents that were launched last year include sweeping changes that in very basic terms will dismantle a bloated public sector and in its place create the conditions needed for a dynamic private sector.

As the Saudi economy transforms, there have been some side effects. In an attempt to reduce current spending, government employees’ pay and benefits were reduced last year. This has affected consumption in the kingdom as workers take home less pay and the added uncertainty defers purchasing decisions.

To cut capital expenditure, projects have been shelved and delayed, while contractor payments have not been made. Any recovery depends on the establishment of project management organisations (PMOs) at government bodies, which will manage future project spending – a process that will take time.

As a result, the value of new work being awarded in the kingdom has slumped. According to regional projects tracker MEED Projects, there were $1.3bn-worth of construction contracts awarded in Saudi Arabia during the first four months of this year, compared with $5.9bn in the same period last year – which itself was considered a bad year.

The economic pain of these side effects now appear to have registered in Riyadh. On 23 May, King Salman bin Abdulaziz al-Saud issued a decree reversing pay cuts introduced last year for government employees, and at the same time issued another decree giving a bonus of two months’ salary to those involved directly in military operations in Yemen from the Interior Ministry, Defence Ministry, National Guard and intelligence services.

For capital expenditure schemes there are also signs of a policy reversal. On 8 May, MEED reported that a joint venture of Turkey’s IC Ictas and the local Al-Rashid Trading & Contracting has been awarded a four-year deal to redevelop four existing terminals at King Khaled International airport in Riyadh.

The team lost its bid for the contract to upgrade the terminals in 2015 to a joint venture of Germany’s Hochtief, the local Nahdat al-Emaar and India’s Shapoorji Pallonji. The contract with the Hochtief-led team, however, was cancelled in 2016.

After repeated comments from the kingdom’s leadership last year about inefficient procurement and the need to introduce more oversight on the delivery of projects with PMOs at every government body, the award of a major contract that was not retendered appears surprising.

While the reversal of pay cuts and the hurried award of contracts could be interpreted as a major shift in policy. Riyadh has been quick to dismiss those thoughts. During a televised interview in Arabic on 2 May, Deputy Crown Prince Mohammed bin Salman affirmed the kingdom’s reform programme and promised to privatise key sectors. He also said that opposition or fear of the listing of Saudi Aramco was “communist thinking”.

Instead of a major policy shift, it appears Riyadh is now open to adopting a more pragmatic approach to its economy. It understands that austerity measures can have negative consequences and it is prepared to address these issues when needed. And as the pay cuts and airport contract award suggest, that might mean temporarily sacrificing the ideals of the vision.