Saudi Arabia's finance minister on Monday said the kingdom will triple its Value Added Tax (VAT) and halt monthly handout payments to citizens in new austerity measures amid a coronavirus-led economic slump.

"It has been decided the cost of living allowance will be halted from June 2020 and VAT will be raised from 5 percent to 15 percent from July 1," minister Mohammed al-Jadaan said, according to the official Saudi Press Agency.

The measures come after Jadaan last week warned of "painful" and "drastic" steps as the government steps up emergency plans to slash spending amid the double shock of the novel coronavirus and record low oil prices.

Saudi Arabia, along with other Gulf states, imposed a five percent tax on goods and services in 2018 in a bid to generate additional revenue. The petro-state had also introduced handouts worth billions of dollars to citizens, known as the cost of living allowance, to cushion the impact of rising costs.

Jadaan has said he expected Riyadh could lose half of its oil income, which contributes about 70 percent of public revenues, as oil prices have fallen two-thirds since the start of the year. He said the world's leading crude exporter would borrow close to $60 billion this year to plug a huge budget deficit.

The International Monetary Fund in April projected that the Saudi economy would contract by 2.3 percent this year.