Largesse from King Abdullah comes after media pressure

It comes weeks after King Abdullah took over the running of the world's largest oil producer following the death of his brother Fahd.

Oil-rich Gulf states have been under pressure to pass on the benefits of oil price rises to their citizens.

This is the first such sweeping rise in Saudi public sector pay for 20 years.

Oil-price optimism

The Saudi government has been using some of the extra revenues produced by the rise by more than 50% in the price of oil since the start of the year to pay down domestic debt and acquire foreign assets.

As Crown Prince before he became King, Abdullah was responsible for the day-to-day operations of the kingdom and tried to improve the state of its finances.

"This (salary increase) reflects an acceptance that strong oil revenues will be around for a while," said Brad Bourland, chief economist at Saudi bank Samba.

The pay boost will apply to the salaries and pensions of civil servants and military staff, but not to top ministry officials.

Analysts said that although the pay rise implied that the Saudis expected oil prices to remain high, the government could still afford the increase if oil fell to $40 a barrel.