Last weekend we quoted Finance Minister Mohammed Al-Jadaan, who warned that the world's biggest oil exporter hasn't witnessed "a crisis of this severity" in decades, adding that government spending will have to be cut "very deeply", something we touched on previously.

We didn't have long to wait, because early on Monday, the Saudi government - which appears to be running out of money fast - ordered government spending cuts including suspending the cost of living allowance amid broad austerity measures for about $26.6 billion and a tripling of the value-added tax as part of measures aimed to shore up state finances, which have been battered by low oil prices and the coronavirus.

"Cost of living allowance will be suspended as of June first, and the value added tax will be increased to 15% from 5% as of July first,"  said the Saudi finance minister according to the state news agency, suggesting Saudi Arabia is on the verge of a full-blown fiscal crisis.

Other measures includes canceling or delaying some operational and capital expenditures for a number of government agencies and reducing the credits planned for a number of state initiatives, including the Vision 2030 project, just as we predicted.

"The covid-19 challenges have led to a decline in government revenues, and pressure on public finances to levels that are difficult to deal with later without harming the kingdom's macroeconomics and public finances in the medium and long term," Al-Jadaan said. "Therefore more spending cuts must be achieved, and measures to support the stability of non-oil revenues."