We will use your email address only for sending you newsletters. Please see our Privacy Notice for details of your data protection rights.

Make the most of your money by signing up to our newsletter fornow

The Middle Eastern kingdom unveiled a £66billion ($66bn) deficit for 2015, 15 per cent of GDP, after fuel revenue failed to provide enough to balance out the government's lavish spending.

In the past huge oil profits have funded the Saudi Royal Family's decadent lifestyle and enabled Saudi citizens to be able to work without paying income tax on top of state-funded benefits.

But now policymakers have announced plans to cut the deficit to £58billion ($87bn) next year with the biggest shake-up of economic policy in the world's top crude exporter for over a decade.

The changes include politically sensitive reforms authorities previously shied away from.

It comes after the International Monetary Fund warned in October that Riyadh would run out of money within five years if it did not tighten its belt.

The 2016 budget, released by the Finance Ministry on Monday, features cuts to energy subsidies and revenues from taxes and privatisation.

King Salman said in a speech: "Our economy has the potential to meet challenges."

The King added the 2016 budget launched a phase in which the country would diversify its revenues away from oil.

In an effort to drive down oil prices and put rival producers out of business, Saudi Arabia uncapped oil production last year.

The Brent oil price fell from more than $100 a barrel last year to an average of $54 this year, and is now around $37 amid a huge glut in the market.