Saudi Arabia is pressing ahead with major cuts to its capital spending as low oil prices continue to put pressure on the finances of the world’s largest oil exporter.

The kingdom estimates to spend SR840bn ($224bn), a reduction of SR135bn from actual spending last year, the Ministry of Finance said in 2016 budget announcement on December 28.

The reduction in spending comes as the Middle East’s biggest economy, which heavily relies on sale of crude for revenues, is grappling with shrinking coffers and a slowing economy. Next year’s budget has been “adopted in light of very low oil prices, as average rates for 2015 declined by more than 45 per cent from the average of 2014,” the ministry said in the statement.

Despite a bullish approach for budgetary allocations in 2015, the spending in 2016 has seen reductions across all the kingdom’s major sectors.

Education and training which received SR217bn from the state budget in 2015 is set to only get SR192bn in 2016.

Infrastructure and transportation will see a more than 50 per cent reduction in its budgeted allocation as the kingdom cuts spending on the sector from SR63bn in 2015 to SR23.9bn in 2016.

The reduction in spending could curtail plans for some of the kingdom’s largest upcoming projects including new metro lines for Mecca, Jeddah and Medina, as well as regional rail projects such as the Saudi Landbridge scheme.

Spending on ongoing projects is already being scrutinised. On 17 September MEED reported that Arriyadh Development Authority (ADA) is exploring options for reducing the level of spending required on the $22bn Riyadh Metro scheme as lower oil prices start to impact ongoing projects in the kingdom.

Earlier in the year the impact of lower oil prices had been limited to a slowdown in new capital spending plans such as ambitious plans to build 11 sports stadiums across the kingdom.

Budget allocation 2016 (SR bn):

• Education and training: 191.7
• Health and social development: 104.9
• Municipality Services: 21.2
• Military and security services: 213.4
• Infrastructure and transportation: 23.9
• Economic resources: 78.1
• Public administration: 23.8
• Budget support provision: 183