The only surprise is that Al-Assaf lasted so long

The termination last night of Ibrahim al-Assaf’s 20-year tenure as Saudi Arabia’s Finance Minister is surprising for only one thing.

It’s that he held the job for so long.

Originally a university teacher, Al-Assaf — 67 — joined government in the late 1980s and worked in the Saudi delegation to the IMF and the World Bank in Washington for nine years.

He returned to Saudi Arabia to fill the essentially meaningless position of Sama vice governor in 1995. That year, King Fahd suffered a crippling stroke and Crown Prince Abdullah became effective regent.

Abdullah brought Al-Assaf into the cabinet as minister of state in October that year and he was made Finance Minister the following January. Al-Assaf was member of a new generation of technocratic ministers mandated by the crown prince to modernise the kingdom’s government to his taste.

Al-Assaf was tasked with imposing discipline on the kingdom’s spending programme. Enjoying the support of Crown Prince Abdullah, Al-Assaf faced off demands for money and favours from people closely connected with the incapacitated Fahd. Some called for his head.

He then had to deal with the implications of the 1998 oil price crash which sent the government’s budget deficit soaring. Al-Assaf survived the challenge.

Rising oil prices from 2003 allowed the kingdom to press ahead with structural reforms in the kingdom’s finance system. The Capital Market Authority (CMA) was created in 2003 to supervise sweeping change in Saudi Arabia’s equity markets, but the kingdom’s share price crash in 2006 disrupted plans and led to the dismissal of the authority’s first chairman.

Saudi Arabians who had lost money in the market wanted more blood, but Al-Assaf was again unscathed.

The 11 years starting 2003 were a golden period for Saudi Arabia’s finances. In this time, the government accumulated a surplus of $600bn. This massive cushion of savings is probably Al-Assaf’s greatest legacy.

But it involved centralising power in Al-Assaf’s ministry. The Public Investment Fund (PIF), now the Saudi government’s principal sovereign wealth fund, was ruled by Al-Assaf who was also on the boards of Saudi Aramco and the Saudi Fund for Development (SFD).

The death last year of King Abdullah, who had succeed Fahd in 2005, led to the succession of King Salman, Fahd’s full brother. His son Prince Mohammed Bin Salman was made Defence Minister and deputy crown prince. The cabinet was reshuffled and the PIF and other government financing agencies were stripped from the Finance Ministry. Prince Mohammed was made chairman of the new Council for Economic & Development Affairs (CEDA) which became the dominant factor in Saudi economic policy making.

Many ministers were dropped. But Al-Assaf, together with Oil Minister Ali al-Naimi, was retained, though the writing was on the wall.

Al-Naimi finally retired in May 2016 leaving Al-Assaf as the sole remaining senior government official appointed by King Salman’s predecessor.

Last month, the kingdom’s successfully floated the Middle East’s largest sovereign bond and opened the door to a largely untapped source of revenue: foreign credit. The IMF suggested last month that Riyadh could sustainably borrow up to $125bn in the next five years from international investors.

The bond offering was another high for Al-Assaf but it was to be his final hurrah.

The kingdom’s now seeking to cut spending and find new domestic revenue sources. Subsidies are being reduced and VAT is coming in 2018, the year Saudi Aramco is scheduled to go public.

These are massive challenges, but no longer for Al-Assaf