Riyadh: Saudi Arabia on Monday announced a 1.02 trillion riyal ($272.00 billion) budget for 2020, a slight fall in spending that reversed three years of expenditure hikes aimed at spurring growth.

Revenues in 2020 are forecast at 833 billion riyals, widening the budget deficit to 187 billion riyals (Dh183 billion), or 6.4 per cent of gross domestic product (GDP), as compared with a projected deficit of 131 billion riyals in 2019, according to the budget document.

Finance Minister Mohammed al-Jadaan told reporters the 2020 budget was conservative on expenditure due to the global economic outlook, but that the government would continue to pay a cost of living allowance to citizens.

The Saudi state news agency SPA quoted Crown Prince Mohammed bin Salman as saying: “The 2020 budget comes amid challenges, risks and protectionist policies facing the global economy, which requires flexibility in managing public finances and enhancing the ability of the economy to face these challenges and risks.” The budget comes ahead of the listing later this week of state-owned oil giant Saudi Aramco.

Finance Minister Jadaan said the proceeds from Aramco’s share offering would be reinvested, helping to create more revenue channels for the government.

Aramco priced its initial public offering at 32 riyals ($8.53) per share on Thursday, raising $25.6 billion and beating Alibaba Group Holding Ltd’s record $25 billion listing in 2014.

“The (2020 budget) revenue projections look realistic in our view oil and non-oil,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank. “The pullback in current expenditure could be more difficult.” Oil revenue is expected to fall to 513 billion riyals in 2020, from an estimated 602 billion riyals in 2019, the budget document says.

Real GDP growth was expected at 2.3 per cent in 2020, according to the document, rebounding from an estimated 0.4 per cent in 2019.

The new 2019 projection is lower than an earlier official forecast of 0.9 per cent GDP growth this year, and down from 2.2 per cent in 2018, as growth has been hurt by lower oil prices and crude production cuts agreed by OPEC nations and producers outside the exporting group.