Saudi Arabia is set to make sharp cuts in government spending as it seeks to manage the economic consequences of the coronavirus (Covid-19) pandemic.

In an interview on 2 May with Saudi broadcaster Al-Arabiya TV, the kingdom's Minister of Finance Mohammed al-Jaddan said: “We must reduce budget expenditures sharply.”

Al-Jaddan said the kingdom would need to take 'painful' measures as it faces up to the effects of the coronavirus lockdown and volatility in the world's oil markets caused by the collapse in demand for oil.

“The kingdom hasn’t witnessed a crisis of this severity over the past decades,” he said. “It’s very important that we take very tough and strong measures, and they might be painful, but they are necessary.

“All options for dealing with the crisis are open,” he said.

Al-Jaddan said that the true impact of the Covid-19 crisis on Saudi Arabia’s finances would become clearer in the second quarter of the year.

A crash in oil prices in March followed the collapse of the three-year agreement between international oil producers to restrict production and is estimated to have resulted in a record $27bn fall in the Saudi central bank’s foreign assets.