Riyadh Image Credit: Agency

Paris: Saudi Arabia on Monday said its budget deficit for next year would widen as the world's top oil exporter faces tumbling oil prices and production cuts.

The kingdom projected a budget deficit of $50 billion for 2020, for the seventh year in a row, up $15 billion on this year, according to an official statement read on state-run TV.

The statement released following a cabinet meeting chaired by King Salman said Riyadh would also cut spending for next year in a rare belt-tightening measure.

Spending was projected at $272 billion, down 7.8 per cent on 2019 estimates while revenues were estimated at $222 billion, also lower by 14.6 percent.

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.

Al 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.

Oil prices have remained sluggish despite additional production cuts agreed by OPEC and its allies last week.

Oil income contributes to more than two-thirds of Saudi public revenues. Riyadh has also committed to larger production cuts to support prices.

King Salman said his government is determined to continue to diversify sources of income and sway the kingdom away from reliance on oil.

"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."

The finance ministry added that actual spending in 2019 came at $279.5 billion and revenues at $244.5 billion, leaving the same projected shortfall of $35 billion. 

Saudi Arabia has posted a budget deficit each year since 2014 when oil prices crashed.