The Arab country is the largest oil producer in the world and its economy is heavily dependent upon the commodity.



But over the past year profits have been dented by a fall in the oil prices from more than $100 (£64.52) a barrel to sit at around $50 (£32.26).



Saudi Arabia's finance minister Ibrahim al-Assaf said: "We have built reserves, cut public debt to near-zero levels and we are now working on cutting unnecessary expenses while focusing on main development projects and on building human resources in the kingdom."



The country has become extremely rich from exporting 'black gold' to the world.



However, in recent years the development of shale gas, particularly in the US, as well as oil production in the North Seas, has threatened Saudi Arabia's dominance as energy exporter.



In an effort to put rivals out of business, the Arab state last year started to flooded the market with oil to drive down prices and profits of oil producers.



This year alone, BP and Shell have announced thousands of job cuts between them.



Heavily dependent on the oil industry, Canada was last week declared in recession.



Now Saudi Arabia itself is adjusting to a drop in revenue with spending cuts such as those announced today, hoping that pain today will secure its future.



But depending on how long oil prices stay low, cuts may have to be larger and more widespread.



At the moment citizens are not subject to income tax free and are handed a number of state funded benefits, the country also spends heavily on military and funds a lavish lifestyle of its royal family.