DUBAI (Reuters) – Saudi Arabia posted a deficit of 109.2 billion riyals ($29.12 billion) in the second quarter this year as low oil prices hurt revenues, according to a finance ministry report on quarterly budget performance.

The coronavirus crisis has hurt the non-oil sectors of the world’s largest oil exporter this year, adding to the impact of historic price lows on the economy.

Oil revenues declined by 45% year-on-year in the second quarter to $25.5 billion. Total revenues dropped 49% to nearly $36 billion.

Total second-quarter expenditures dropped annually by 17% to around $65 billion, the document showed.

“A pullback in spending is essential for containing the deficit,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.

“The proactive stance of the government was already reflected in the austerity measures announced in April. However, these will dampen the recovery outlook,” she said.

Facing a deep recession this year, Saudi Arabia has introduced measures such as removing a cost-of-living allowance for state employees and tripling value-added tax to 15% to bolster state revenues.

The International Monetary Fund has estimated the Saudi economy could shrink by 6.8% this year, a figure Saudi officials have said was “pessimistic”.

Economists have said that tripling VAT could hold back recovery as restrictions aimed at reducing the spread of the cornavirus are lifted.

Saudi Arabia, which in the first three months of the year posted a $9 billion deficit, has raised $12 billion in international markets so far this year and has borrowed 41.1 billion riyals ($10.96 billion) in the domestic market, the document showed.

Finance Minister Mohammed al-Jadaan said this month that the kingdom plans to tap international debt investors at least once more this year.

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