Riyadh: Saudi Arabia’s King Salman on Tuesday announced a $295bn budget for 2019, the kingdom’s biggest ever, and ordered the continuation of public sector cost-of-living allowances.

He said the government would increase state spending by more than 7 percent in 2019 to ignite economic growth.

King Salman said the budget was the largest in the Kingdom’s history, aiming to support economic growth and achieve financial stability.

“We are determined to go ahead with economic reform, achieving fiscal discipline, improving transparency and empowering the private sector,” he said.

Spending is projected to rise to SR 1.106 trillion ($295 billion) next year, up from an actual SR 1.030 trillion this year.

The move is seen as an effort to boost economic growth, which has been hurt by low oil prices.

The budget estimates a 9 percent annual increase in revenues to SR 975 billion. The budget deficit will be SR 131 billion.

Crown Prince Mohammed bin Salman said the budget would increase the efficiency of monetary management and boost the economy.

Saudi Arabia is “committed to improving quality of life and investment in infrastructure,” he said.

About 35 percent of spending would go towards the military and education.

The health sector would also receive an 8 percent boost from 2018.

“We believe that the 2019 fiscal budget will be focusing on supporting economic activity – investment and wider,” Monica Malik, chief economist at Abu Dhabi Commercial Bank (ADCB), told Arab News.

A royal decree by Saudi Arabia’s King Salman, also announced Tuesday, ordered the continuation of allowances covering the cost of living for civil sector employees for the new fiscal year.

“The continuation of the handout package will be positive for household consumption by nationals,” said Malik. “We expect to see some overall fiscal loosening in 2019, which should support a further gradual pickup in real non-oil GDP growth.”

Malik said the government spending projection in the 2019 budget is in line with earlier official indications.

A pre-budget statement in September, the first of its kind in Saudi Arabia, predicted next year’s budget would be SR1.11 trillion.

The Kingdom has run a budget deficit since 2014 as a slump in oil prices lowered state income. Saudi Arabia aims to balance its budget by 2023.

World oil prices on Tuesday tumbled to their lowest levels in more than a year amid concerns over demand. Brent and New York crude contracts fell to as low as $57.20 and $47.84 during morning trading.