Saudi Arabia has announced a 990 billion riyal ($A350 billion) budget for 2021, around 7 per cent less than estimated spending for this year.

The move comes as the world’s biggest oil exporter seeks to tame a huge deficit caused by lower petroleum revenues and the coronavirus crisis.

The kingdom expects to post a deficit of 298 billion riyals this year or 12 per cent of gross domestic product.

Crude revenues are slated to drop by over 30 per cent, and 141 billion riyals or 4.9 per cent of GDP next year, according to a budget statement.

It plans to nearly balance its budget by 2023.

The finance ministry said the budget reflected “the ability to adopt appropriate policies to balance between growth, economic stability and fiscal sustainability in the medium and long term”.

Saudi Arabia expects the economy to shrink by 3.7 per cent this year but to swing back to a 3.2 per cent growth next year.

Saudi Finance Minister Mohammed al-Jadaan said in a press conference most economic sectors had started to recover from the pandemic’s impact in the second half of this year.

“The economic recovery of economic activities in the third and fourth quarters bodes well for economic growth in the coming years,” he said.

Brent crude oil prices have rebounded since plunging to a more than 20-year low in April but at $US50 per barrel are significantly below the $US67.9 per barrel Saudi Arabia would need to balance its budget next year, according to the International Monetary Fund.

Monica Malik, chief economist at Abu Dhabi Commercial Bank, said the deficit target for next year looked ambitious “but this year we have seen vital support to the budget through strong Aramco dividend and investment returns, and these are likely to be key factors”.

Saudi Arabia expects public debt to increase to 937 billion riyals next year from 854 billion riyals this year.

Government reserves at the Saudi central bank are expected to drop to 280 billion riyals next year from an estimated 346 billion this year.