RIYADH, March 15: Saudi Arabia’s King Fahd ordered his government on Saturday to pay 1.6 billion riyals ($427 million) in arrears to local farmers for their 1999/2000 harvest, the official Saudi Press Agency (SPA) reported.

It said the state Grain Silos and Flour Mills Organization would next week make the payments to wheat and barley farmers in the second and final tranche for the 1999/2000 harvest.

The desert kingdom, which buys local crops from farmers at subsidised prices, last year paid farmers 1.237 billion riyals in arrears for that harvest.

The oil-rich Gulf state is trying to catch up on arrears to farmers and suppliers which built up after the costly 1991 Gulf War and through several years of low oil prices.

Riyadh has announced plans to relinquish part of its hefty domestic debt, estimated at around $170bn, through the proceeds of a privatization plan and equity for debt swaps.—Reuters