Saudi Arabia crushed by cheap oil - and the cuts are coming

The government spent way more than it collected in 2015 -- leading to a budget deficit of nearly $100 billion.

Oil accounts for 75% of Saudi Arabia's revenue, and when crude prices were sky high, the country enjoyed frequent budget surpluses. Now oil has collapsed below $35 a barrel, compared to over $100 in mid-2014.

Saudi Arabia also said it spent more than expected on social security benefits and salaries for government workers and military members.

As a results, cuts are coming: The budget calls for a 14% reduction to 840 billion riyals ($224 billion), down from 975 billion ($260 billion).

Saudi Arabia is even thinking about cutting the massive discount it gives its citizens on gasoline. The Ministry of Finance confirmed it is "reviewing" a change to government subsidies on energy, water and electricity.

Saudi Arabia revealed other steps to fix its finances, including implementing a budget ceiling, reviewing public spending on projects and training 3,500 workers to improve the government's accounting practices.

The country hopes to boost revenue by introducing a previously-approved VAT tax and by adding fees to "harmful goods" like tobacco and soft drinks.

Despite those moves, Saudi Arabia said it expects its budget deficit to basically remain the same in 2016. That's not good because outside observers have warned the Saudis to get their fiscal house in order fast.

Standard & Poor's downgraded Saudi Arabia in October and warned of further cuts if the kingdom fails to rein in deficits or runs low on cash. The International Monetary Fund also recently said Saudi Arabia could run out of cash in five years or less if oil stays around $50 a barrel. The IMF said the kingdom needs to sell oil at around $106 a barrel to balance its budget.

The Saudis have tried to preserve cash by cutting spending and making other financial maneuvers. For example, the kingdom raised $4 billion by selling bonds earlier this year. Saudi Arabia's central bank also yanked up to $70 billion from asset management firms like BlackRock (BLK). And it's also trying to convince foreigners to invest in its stock market.

Still, Saudi Arabia's public debt has more than tripled between last year and this year. It now totals 142 billion riyals, or roughly 6% of the country's gross domestic product.

(CNN)