The International Monetary Fund on Thursday further cut its growth projections for Saudi Arabia's oil-dependent economy for this year and next despite a rebound in crude prices.

The IMF forecast growth of 2.8 percent this year, 0.2 percentage points down on its last report in April.

It also lowered its projection for 2016 to 2.4 percent -- 0.3 percentage points down on its last World Economic Outlook Update.

In 2014, the Saudi economy grew by 3.5 percent.  

The new gloomy projections come as Saudi Arabia maintains high spending and a costly military intervention in neighbouring Yemen despite a sharp fall in oil income, which contributes more than 90 percent of public revenues.

Saudi Arabia has projected a budget deficit of $39 billion for this year, but the IMF estimates the shortfall could exceed $130 billion, the largest in the kingdom's history.

In 2014, Saudi Arabia posted a budget deficit of $17.5 billion -- only its second since 2002.

To finance spending, Riyadh has already withdrawn $52.3 billion from its fiscal reserves in the first five months of the year.

The reserves stood at $732 billion at the turn of the year and dropped to $679.7 billion at the end of May, according to Saudi Arabian Monetary Agency figures.

Oil prices crashed from around $115 a barrel in June last year to just $46 in January before recovering to around $60.

The IMF projected on Thursday that the price of benchmark Brent crude would average $59 a barrel this year.

It estimates that Saudi Arabia needs a price of more than $100 a barrel to balance its budget.

The world's largest exporter is currently pumping 10.3 million barrels of crude per day.
Source: AFP